Tags: EU | Germany | Earns | Adidas

Adidas Earnings Skyrocket as World Cup Fuels Sales Spike

Tuesday, 04 May 2010 10:11 AM

A boost in sales due to big sporting events like the Superbowl and the upcoming World Cup pushed athletic shoe and clothing maker Adidas AG's first quarter profit sharply higher.

Adidas said Tuesday it earned 168 million euros ($222.4 million) in the January-March period, a big leap from the 5 million euros it posted a year earlier.

The sharp increase came as revenues rose 4 percent to 2.67 billion euros in the quarter compared with 2.57 billion euros a year earlier.

Adidas' brands include Reebok, Rockport and Reebok-CCM Hockey.

CEO Herbert Hainer said the company had a "great start" to the year, with record first-quarter sales. Those were boosted in part by football sales — after the National Football League playoffs resulted in the New Orleans Saints winning the Superbowl — along with strong performances for the Adidas and Reebok brands in the U.S.

"We had a great start to the year, achieving record first quarter sales driven by growth in all segments," Hainer said in a statement. "Our retail segment, record football sales and a strong performance for Adidas and Reebok in North America were some of the main catalysts driving this development."

Adidas, the world's No. 2 sportswear company by sales after Nike Inc., said North American sales were up 10 percent to 585 million euros in the quarter while sales in Latin America rose 24 percent to 271 million euros.

Revenues were up in nearly all of the company's markets, save for China, where sales fell 20 percent to 198 million euros in the quarter.

In western Europe, sales were up 4 percent, helped in part by growing anticipation for the World Cup that starts next month in South Africa. Adidas outfits several teams with gear and is providing the match balls for the monthlong tournament that begins June 11.

During the last World Cup in 2006, hosted by Germany, Adidas was able to add more than 1 billion euros to its top line, through sales of soccer equipment like jerseys, cleats and balls, as fans snatched up garb during the monthlong tournament.

Looking ahead, the company based in Herzogenaurach, Germany, said it expects its net profit to improve this year, with earnings per share expected to reach between 2.05 euros and 2.30 euros for the year. That's better than the initial forecast of between 1.90 euros and 2.15 euros a share.

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