Adidas sales rise more than expected, Rockport sold

Monday, 26 January 2015 00:00 - - {{hitsCtrl.values.hits}}

Sales up 2 pct to 14.8 billion in 2014
Rockport sold for $ 280 m

Reuters: German sportswear company Adidas reported a better than expected rise in 2014 sales on Friday as it announced the sale of its non-core Rockport shoe brand. The world’s second-biggest sportswear group behind Nike has been losing market share to its US rival, which has been better at creating a buzz with its brands, but its sales were helped by the 2014 soccer World Cup and the victory of the German team it sponsors. In Friday’s unscheduled statement ahead of full results due on 5 March, Adidas reported 2014 sales up 2%to € 14.8 billion ($ 16.8 billion), beating a Thomson Reuters Smart Estimate of € 14.68 billion. Long-serving Chief Executive Herbert Hainer, who came under pressure last year after a series of profit warnings, said the group recorded double-digit growth in the fourth quarter in western Europe, Greater China, European emerging markets and Latin America, without giving figures. But he made no mention of sales in the United States, where Adidas has slipped to third place behind Nike and fast-growing Under Armour despite the recent signing of top basketball players and celebrities such as Kanye West and Pharrell Williams. “The full-year prelims confirm that the Adidas brand is doing OK outside the United States. In contrast, Russia remains a challenging market,” said Commerzbank analyst Andreas Riemann, who rates the stock a “hold”. Shares in the company, which have dropped a third in the past year partly because of its exposure to the Russian market and the rouble, were up 3.8% at 1102 GMT, beating a 1.4% rise in Europe’s retail index. Adidas has struggled to compete in the United States despite buying Reebok in 2006, bringing with it the Rockport shoe brand that sought to bring the comfort of sports shoes to more traditional leather footwear. The German group said the disposal of Rockport for $ 280 million to a new entity formed by Berkshire Partners and New Balance would result in a “double-digit million euro” hit to 2014 profit. It expects the sale to be completed later in 2015. Hainer said Adidas is selling Rockport because it is not core to its strategy of focusing on sport. “The sale of Rockport will allow us to reduce complexity and pursue our target consumer more aggressively with the Adidas, Reebok and TaylorMade brands,” he said.