Soccer tournament helps sports-apparel company post higher revenue and profit
By William Boston
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 10, 2018).
BERLIN -- Adidas AG's net income more than doubled in the three months to June, after demand for merchandise from the soccer World Cup boosted sales growth in North America and China.
The better-than-expected earnings, reported Thursday, drove the sporting goods company's stock more than 7% higher. The results came as Adidas faces a fresh challenge on its home turf from U.S.-rival Nike, which is establishing a German headquarters in Berlin to tap the city's trendsetting youth scene.
Adidas's net income rose to EUR396 million ($460 million) in the second quarter, up from EUR158 million in the comparable period of 2017. Profit growth outpaced the increase in sales revenue, which rose 4.4% to EUR5.26 billion.
The company was among the sponsors of the hugely popular World Cup soccer tournament that took place this summer in Russia. It benefited from high sales of its World-Cup-branded merchandise, Adidas CEO Kasper Rorsted said.
"We remain firmly on track to achieve our set targets for the full year, " he added.
Adidas said double-digit revenue growth in its namesake brand offset a decline in revenues from its Reebok brand.
Sales of Adidas branded products rose 12% on the back of strong demand for training, running and soccer merchandise. Online channels have been particularly strong, the company said.
In North America, where Adidas contends with Nike's dominance in popular sports such as running and basketball, the company generated revenues of EUR1.08 billion, up 15.6% in currency-neutral terms.
Adidas has been playing catch-up with Nike for years. Although the German challenger has made some big gains and is posting strong growth in Nike's backyard, the U.S. sporting goods maker is still much larger.
In its fiscal fourth quarter to the end of May, Nike generated net income of $1.1 billion, an increase of 13%, on global revenue of $9.8 billion, up 8% on a currency-neutral basis comparable to Adidas' reporting.
Nike has lifetime deals with some of the most well-known names in professional sports, such as soccer star Cristiano Ronaldo, LeBron James and Michael Jordan. Nike hosts the NBA legend's "Air Jordan" brand.
The Nike-Adidas rivalry was on full display during the World Cup. Adidas had the exclusive rights to put its name on the match balls and sponsored more teams than any other brands. But it was Nike's swoosh that adorned the jersey's of the winning French team.
Nike is growing faster than Adidas in Europe and China, even as Adidas makes inroads in North America, outpacing Nike in revenue growth and poaching some of Nike's stars in sponsorship deals.
Adidas' revenue in Asia rose nearly 19% to EUR1.73 billion, driven by a 26% increase in China. Western European revenues were nearly unchanged at EUR1.4 billion.
Anthony Shevlin contributed to this article.
Write to William Boston at email@example.com
(END) Dow Jones Newswires
August 10, 2018 02:47 ET (06:47 GMT)
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