Adidas forecasts a year-over-year gross margin improvement during the second half of 2017 and expects to continue to generate operating leverage throughout the remainder of the year. As a result, net income from continuing operations is now forecasted to increase at a rate between 26 and 28 per cent in 2017 to a level between €1.360 billion and €1.390 billion. This compares to the original guidance as provided in March of an increase of between 13 and 15 per cent to a level between €1.200 billion and €1.225 billion for the company’s net income from continuing operations.

Revenues from the company’s continuing operations increased 19 per cent on a currency-neutral basis and 20 per cent in euro terms to €5 billion as per the preliminary results for the second quarter of 2017. The company’s operating profit increased 18 per cent to €505 million in the second quarter of 2017 (2016: €429 million) despite the one-time gain of around €70 million related to the early termination of the Chelsea FC sponsorship that was included in the prior year’s quarter. The operating profit improvement was driven by a higher gross margin as well as operating expense leverage. Net income from continuing operations increased 16 per cent to €347 million during the quarter (2016: €301 million), said Adidas in a press release.

As previously announced, due to the existence of signed agreements to divest the TaylorMade, Adams Golf, Ashworth and CCM Hockey brands, the results from these businesses are reported as discontinued operations. In the second quarter, the TaylorMade and CCM Hockey divestitures had a non-operational negative impact on discontinued operations of around €200 million. At the same time, the company’s continuing operations, which now mainly consist of the Adidas and the Reebok brand, were not affected. (KD)

Fibre2Fashion News Desk – India