| Adidas profit drops 64%, sales down 5% |
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03/03/2010 14:23 (710 Day 07:06 minutes ago) | |||||
The FINANCIAL -- Adidas AG, the world’s second- largest sporting-goods maker, said fourth-quarter profit dropped 64 percent and sales down 5% to 2.46 billion euros.
Net income fell to 19 million euros ($25.9 million), or 9 cents a share, from 54 million euros, or 27 cents, a year earlier, the Herzogenaurach, Germany-based company said today in a statement handed out to reporters, Bloomberg reports. That missed the 27.6 million-euro average estimate of eight analysts compiled by Bloomberg. Sales slid 4.5 percent to 2.46 billion euros.
According to the same source, the company wrote down 33 million euros related to its Reebok retail business in China, according to the statement. The sporting-goods maker forecast profit this year will be between 400 million euros and 450 million euros, as currency-adjusted sales will rise at a “low to mid single-digit pace,” boosted by the soccer World Cup in South Africa.
Adidas, the world's second largest sportswear company by sales after Nike Inc., said rising purchasing costs and currency effects were the main reasons for the decline in net income. "With no doubt, 2009 was the most difficult year during my time as chief executive," Herbert Hainer said in the report, AP wrote.
"However, we rose to the challenge. Despite a 53 percent decline in operating profit, we generated a 141 percent increase in net cash from operations for a record euro1.2 billion. This is definitely the outstanding achievement of the year and a credit to all the hard work and dedication of our employees," Hainer said, according to AP.
Adidas also sees sales growing at a low- to mid-single-digit rate. That's still more optimistic than its cross-town rival Puma (PUMG.DE), which has said it expected this year's sales to remain at least flat, Reuters reports. "The dividend is below expectations and in light of the upcoming Soccer World Cup the outlook for 2010 is rather weak," said Heino Ruland, strategist at Ruland Research.
Adidas said it expects consumers to slowly return to pre-crisis spending habits, and sees retailers remaining cautious this year. But it hopes to offset that with rising sales of soccer jerseys and other gear in the run up to the World Cup, its business in emerging markets and a stronger Reebok brand, according to the same source. Adidas is kitting out 12 teams, more than before, including Germany, host nation South Africa, and European champion Spain. U.S. behemoth Nike (NKE.N) sponsors 10 teams, and Puma seven.
Adidas' brands include TaylorMade-adidas Golf, Rockport and Reebok-CCM Hockey, AP reports. The news sent shares of Adidas 5.5 percent lower to euro35.93 in Frankfurt morning trade.
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