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Adidas enjoys “quality” growth in Q3, North America, China, digital the main drivers

It’s all about the quality of growth, according to Kasper Rorsted, so the adidas CEO must be (mostly) pleased with its Q3 performance.

Currency-neutral revenues increase 12%, e-commerce revenues leapt 39%, net income jumped 35% to €549m, and gross margin improved 2.4% to 50.4%.

“The company’s strategic growth areas – North America, Greater China and e-commerce – were again the main drivers of our strong top-line performance,” Rorsted said Thursday, adding we are “fully on track to achieve our ambitious 2017 financial targets” for good measure.

Within the 12% revenue rise was a 13% increase at brand adidas, driven by double-digit increases in the running and outdoor categories as well as at adidas Originals and adidas neo. In euro terms, sales were up 9% in the quarter to € 5.677bn.

However, there were some notable negatives. Sales in the football (soccer) and basketball categories declined, “reflecting significantly lower license revenues mainly due to the termination of two major sponsorship agreements,” it explained.

Also, revenues at the Reebok brand grew just 1%, “as the planned efforts to clean up Reebok’s distribution in the US marketplace are having an increasingly negative impact on the brand’s top-line development”.

Geographically, adidas enjoyed “excellent growth” in Greater China (+28%) and North America (+23%), driven by the adidas brand. Currency neutral combined sales of the adidas and Reebok brands in fact grew in all regions except Russia/CIS, down 17% on lower consumer sentiment and fewer stores.

Western Europe advanced 7% and Latin America rose 8%, while MEAA and Japan increased 6% and 3%, respectively. Sales in Russia/CIS declined 17%, reflecting the ongoing challenging consumer sentiment as well as additional store closures during the third quarter, it explained.

adidas also confirmed its top- and bottom-line outlook for the full year. It continues to expect sales to increase between 17-19% currency neutral and net income from continuing operations to increase 26-28% to €1.36bn-€1.39bn.

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