The company's gross margin increased 50.4 per cent (2016: 48.1%). This development was mainly due to the positive effects from a better pricing and product mix, which more than offset higher input costs as well as unfavourable currency developments. Other operating expenses increased 8 per cent to € 2.129 billion (2016: € 1.963 billion), reflecting an increase in expenditure for point-of-sale and marketing investments as well as operating overhead expenditure. From a channel perspective, the company's revenue growth was driven by increases in all distribution channels, with particularly strong support from e-commerce, where revenues grew 39 per cent.
During the third quarter, the operating profit rose 35 per cent to €795 million (2016: € 591 million), resulting in an operating margin increase to 14.0 per cent (2016: 11.3%). For the reported period, inventories increased 7 per cent to € 3.441 billion (2016: € 3.203 billion). On a currency-neutral basis, inventories grew 11 per cent. Inventories from continuing operations increased 13 per cent (+16% currency-neutral). Operating working capital increased 6 per cent to € 4.502 billion (2016: € 4.228 billion) at the end of September 2017. On a currency-neutral basis, operating working capital grew 11 per cent. Operating working capital from continuing operations rose 14 per cent (+19% currency-neutral).
"The company's strategic growth areas - North America, Greater China and e-commerce - were again the main drivers of our strong top-line performance during the third quarter. We are even more pleased with the quality of our growth, which is clearly reflected in the exceptional profitability improvement in Q3," said Adidas chief executive officer Kasper Rorsted. "We delivered another set of strong results and are fully on track to achieve our ambitious 2017 financial targets."
The company expects sales to increase at a rate between 17-19 per cent on a currency-neutral basis in 2017. Net income from continuing operations is projected to increase at a rate between 26-28 per cent to a level between €1.360-€ 1.390 billion. In addition to the strong revenue growth, the excellent bottom-line improvement will be driven by a gross margin increase to 50.0 per cent. Other operating expenses as a percentage of sales are forecasted to be below the prior year level of 42.7 per cent, driven by leverage from expenditure for point-of-sale and marketing investments as well as lower operating overheads as a percentage of sales. (RR)
Fibre2Fashion News Desk – India