Adidas Q1 profits above expectations with sales surge forecast
Adidas exceeded analysts’ forecasts with a 17-per-cent year-on-year increase in profits in the first quarter, with sales expected to accelerate in the second half of 2019.
The German sportswear giant today announced net profits of €632 million ($705 million) for January to March, well above the projected figure of €569 million.
Operating profits were also up by 17 per cent, to €875 million, as revenues climbed by 6 per cent to €5.9 billion, in line with expectations.
Sales at the flagship Adidas brand rose by 5 per cent although the Reebok subsidiary continues to struggle, with revenues down 6 per cent.
Adidas has admitted that supply chain issues have been a lag on sales in the key North American market where there was growth of just 3 per cent in the first quarter.
China continues to deliver, with currency-neutral sales up 16 per cent, but there were declines of 3 per cent in both Europe and Latin America.
While a surge in online sales is helping to drive overall growth, Adidas anticipates that the slowdown will continue in the second quarter.
However, chief executive Kasper Rorsted said the business remains “confident about the top-line acceleration in the second half.”
Adidas is projecting that sales will increase by between 5 per cent and 8 per cent in currency-neutral terms, while net profits will be up by between 10 per cent and 14 per cent, in 2019 as a whole.