Adidas Extends Winning Streak

FRANKFURT—Adidas AG's return to form continued Wednesday as it raised its guidance for 2016 for the second time in three months on a leap in earnings.

The world's second-largest sporting-goods company, after Nike Inc., recorded a 38% rise in net profit to €350 million ($394.9 million), beating analyst expectations. Revenue increased 17% when adjusted for currency effects.

Adidas said it now expects currency-adjusted sales in 2016 to grow at a rate of about 15% and net profit at between 15% and 18%.

The company's shares were up 6.4% Wednesday morning, leading the gainers on the Frankfurt blue-chip index.

The German sportswear maker has been enjoying stellar momentum recently. In December, departing Chief Executive Herbert Hainer said he expected 2016 to be a record year for the company.

The recent good news has come at a convenient time for Mr. Hainer, who is set to leave Adidas in October after 15 years at the helm.

About a year ago, his situation was quite different.

Due to currency losses in Russia, a general poor performance in North America and tumbling golf sales, Mr. Hainer had to slash his ambitious financial targets for 2014 and 2015.

He issued two surprise profit warnings in a year that investors had expected to be particularly good due to the FIFA World Cup. Suddenly, activists began raising concerns about his management skills. Some even demanded his departure.

Mr. Hainer, on the other hand, refused to move. He had learned from his mistakes, he said at the time. He promised his new game plan was already under way.

Since then, Mr. Hainer has reshuffled the company's North American management, boosted its marketing budget, begun developing local and in-store production facilities, and tried to enhance brand awareness through collaborations with profiled U.S. athletes and pop stars.

In the past year, Adidas has been one of the best-performing companies on the Frankfurt stock exchange. Its profits have risen every quarter.

Analysts have in recent months pointed to the general growth of the sporting goods industry when talking about Adidas's numbers, given that competitors Nike and Under Armour Inc. also have been delivering strong results.

Bryan Garnier analyst Cé dric Rossi said Wednesday that Adidas's most recent figures are also a sign of a successful company strategy.

"Today's numbers suggest that Adidas also has been better at execution, marketing and launching the right products at the right time," he said.

Mr. Hainer's efforts even seem to show results in the North American market, where Adidas had been struggling for decades.

NPD analyst Matt Powell said Adidas's U.S. resurgence is ongoing. According to NPD figures, the company performed particularly well in the lifestyle running, classics and casual footwear segments in March.

"Adidas moves from two years ago are really paying off," Mr. Powell said.

Write to Ellen Emmerentze Jervell at [e-mail]

(END) Dow Jones Newswires

April 27, 2016 05:15 ET (09:15 GMT)

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