Despite difficult comparisons Adidas Q2 topline up 15%

07 Aug '15

3 min read

Despite, difficult comparisons after record World Cup related sales in the prior year second quarter, topline at Adidas Group expanded 15 per cent year over year in the second quarter of 2015.

In the three months to June 30, 2015, in euro terms, revenues grew 15 per cent during the second quarter of 2015 to €3.90 billion from €3.40 billion in the prior year second quarter.

While on a currency-neutral basis, sales rose slower at 5 per cent year on year, driven by continued sales momentum at both Adidas and Reebok.

Currency-neutral sales for the Adidas brand improved 8 per cent, driven by double-digit sales increases at Adidas Originals and Adidas Neo as well as mid-single-digit growth in the training category.

Currency-neutral Reebok brand sales were up 6 per cent versus the previous year's second quarter as a result of double-digit sales increases in the training, running and studio categories.

However, revenues at TaylorMade-Adidas Golf in the reporting quarter plunged 26 per cent currency-neutral, due to sales decreases in most categories, in particular metalwoods and irons.

"We have said all along that our new strategy 'Creating the New' will already show first positive results this year and the second quarter is proof of that," Herbert Hainer, Adidas Group CEO said.

The Group's gross profit for the second quarter of the current year increased 13 per cent to €1.889 billion as against €1.673 billion in the year ago quarter.

“But gross margin dipped 0.9 percentage points to 48.3 per cent from 49.2 per cent led by higher input costs, negative currency effects as well as lower product margins at TaylorMade-Adidas Golf,” it added.

Other operating expenses grew 13 per cent to €1.720 billion, reflecting an increase in sales and marketing budget investments as well as higher operating overhead costs.

In the second quarter of 2015, operating profit drove up 8 per cent from the second quarter of last year to €234 million, representing an operating margin of 6 per cent, down 0.4 percentage points.

“This development was primarily due to the decline in gross margin, which more than offset the positive effect from lower other operating expenses as a percentage of sales,” the sports goods marketer explained.

Net income from continuing operations improved, albeit slower at 2 per cent to €146 million from €144 million in the second quarter of 2014.

In order to meet the persisting challenges at TaylorMade-Adidas Golf, the German company has initiated a major turnaround plan for its golf business.

The set of measures is aimed at enhancing the company's pricing, promotion and trade patterns, as well as optimising the supply chain and product costs.

Furthermore, the Group targets a re-prioritisation of the global marketing spend and significant operating overhead savings at TaylorMade-adidas Golf.

In addition, the adidas Group has engaged with an investment bank for the purpose of analysing future options for the company's golf business, in particular the Adams and Ashworth brands. (AR)

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