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9M net income plummets 21% at adidas Group
07
Nov '14
In the first nine months of 2014, net income plummeted 21% year-on-year at adidas Group to € 630 million from € 796 million in the same period of 2013.

Correspondingly, basic and diluted earnings plunged to € 3.01 per share in the January to September 2014 period, from € 3.81 in the first nine months of 2013.

adidas Group said its revenues grew by just 1% in the first nine months of 2014 to € 11.116 billion from € 11.013 billion, in the corresponding period of 2013.

However, on a currency-neutral basis, sales rose 6% year-on-year, driven by sales increases in wholesale and retail, while currency exchange effects had a negative impact on sales in euro terms.

In the reporting period, currency-neutral wholesale revenues grew 6% from a year ago period, from sales growth at both, adidas and Reebok.

Currency-neutral retail sales were up 21% versus the prior year as a result of double-digit sales increases again at both, adidas and Reebok.

adidas said revenues in other businesses were down 17% on a currency-neutral basis, due to double-digit sales declines at TaylorMade-adidas Golf.

At the same time, currency translation effects had a negative impact on segmental sales in euro terms.

By brand, revenues at adidas grew 11% year-on-year on a currency-neutral basis, driven by double-digit sales growth in the sport performance football and running categories, as well as at adidas NEO.

Sales at Reebok grew 6% from the first nine months of 2013, on a currency-neutral basis, led by double-digit increases in the fitness training, walking and studio categories as well as at Classics.

However, revenues in the period January to September 2014 at TaylorMade-adidas Golf declined 29% from a year earlier period, on a currency-neutral basis.

Gross profit in the first nine months of 2014 slipped to € 5.392 billion, down 2% from € 5.488 billion in the first nine months of 2013.

Gross margin at adidas descended 1.3 percentage points to 48.5% in the first nine months of 2014 from 49.8% in the prior year period.

“Gross margin fell from negative currency effects as well as higher input costs and increased clearance activities mainly in Russia/CIS, as well as lower margins at TaylorMade-adidas Golf,” adidas explains.

Group operating profit however plunged massively by 20% from the prior year period to € 927 million in the first nine months of 2014.

Operating margin too followed suit and went down 2.2 percentage points to 8.3% from 10.5% in the first nine months of 2013.

“This development was primarily due to the negative effects from the lower gross margin as well as higher other operating expenses as a percentage of sales,” adidas informs.

In euro terms, other operating expenses increased 3% to € 4.647 billion versus € 4.515 billion in the same period of 2013, from higher expenditure related to expansion of retail activities and rise in sales and marketing expense.

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