During the second quarter of 2013, the adidas Group delivered a solid financial performance.
Group sales were stable on a currency-neutral basis as growth in Retail offset sales declines in Wholesale and Other Businesses. From a regional perspective, currency-neutral revenues in Western Europe decreased 11%.
- Group sales stable on a currency-neutral basis
- Gross margin grows 2.1 percentage points to 50.1%
- Earnings per share increase 6% to new record level of € 2.29
- Strong momentum in Latin America and Greater China offsets declines in Western Europe
- Reebok returns to growth with revenues increasing 11% in Q2
- Inventories remain stable on a currency-neutral basis
- Management updates full year guidance
This was mainly due to high prior year comparisons related to the sell-in of event-related products for the UEFA EURO 2012TM and the London 2012 Olympic Games as well as the ongoing macroeconomic challenges in the region. In European Emerging Markets, currency-neutral sales remained stable as growth in most of the region's markets was offset by double-digit declines in the Ukraine. Group sales in North America were down 2% on a currency-neutral basis.
This development was mainly due to sales declines at TaylorMade-adidas Golf owing to a more challenging golf market due to a late seasonal start and lower rounds played. In Greater China, Group sales were up 6% on a currency-neutral basis, due to continued momentum across all channels. Currency-neutral revenues in Other Asian Markets increased 7%, driven by sales increases in most of the region's major markets. In Latin America, currency-neutral sales grew 21%, with strong growth in all key markets.
From a brand perspective, second quarter sales at adidas remained stable on a currency-neutral basis. Sales at Reebok grew 11% on a currency-neutral basis. Revenues in the TaylorMade-adidas Golf segment declined 8% on a currency-neutral basis. Rockport sales grew 7% currency-neutral and revenues at Reebok-CCM Hockey increased 2% on a currency-neutral basis. Currency translation effects had a negative impact on sales in euro terms. Group revenues declined 4% to € 3.383 billion in the second quarter of 2013 from € 3.517 billion in 2012.
Second quarter gross margin increases 180 basis points
The Group's gross margin increased 1.8 percentage points to 50.1% (2012: 48.2%) in the second quarter. A more favourable pricing, product and regional sales mix as well as a larger share of higher-margin Retail sales, more than offset the negative effect of a less favourable hedging rate. Group gross profit remained virtually unchanged at € 1.694 billion (2012: € 1.697 billion).
Other operating expenses as a percentage of sales increased 1.9 percentage points to 44.3% compared to 42.4% the prior year. The Group's operating margin increased to 7.4% from 7.3% in 2012, as a result of the gross margin increase. Operating profit declined 2% to € 252 million compared to € 256 million in 2012. The Group's net income attributable to shareholders grew 4% to € 172 million (2012: € 165 million). Diluted earnings per share for the second quarter increased 4% to € 0.82 (2012: € 0.79).
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