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MarketScreener Homepage  >  Equities  >  Xetra  >  Adidas AG    ADS   DE000A1EWWW0

ADIDAS AG

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Adidas : Shakes Off Its Old Achilles Heel--Heard on the Street

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05/03/2019 | 07:20am EDT

By Carol Ryan

Great sporting performances usually involve an element of sacrifice. Adidas is catching up with Nike on profitability -- but at the risk that sales growth slips.

The German sportswear company, which owns Reebok as well as its namesake brand, said Friday that net profit in the first quarter of 2019 increased by 17% compared with the same period of last year. Adidas's business is increasingly shifting online, where sales are more lucrative than those made in its 2,400-strong network of stores world-wide. It also negotiated better prices with suppliers.

For this quarter at least, Adidas's operating margin inched ahead of what Nike managed in its latest set of numbers. While analysts still expect the U.S. giant to report a superior margin of 12.4% for its full financial year, according to FactSet, Adidas won't be far behind at 11.5%.

The improved performance, which shifts the old dynamic between the longtime rivals, sent the German company's shares up 7% in early trading. Traditionally, Adidas's sales growth was top of class, thanks to demand for Yeezy trainers and Stan Smith retro sneakers, but its profitability needed work.

Now, it is growth that looks slack in important markets. Sales at constant currencies fell in both Europe and Latin America, while North America grew a modest 3%. Adidas's overall top line is currently growing at less than half the rate of Nike's. This is less a sign that brands are being starved of investment than that management may be overstretched. The company is having supply-chain problems in the U.S., where it underestimated demand for certain products. Chief Executive Kasper Rorsted expects the issue to be fixed later in the year.

Adidas is starting to look as lean as Nike. Now it needs to recover some of its old sales pace.

Write to Carol Ryan at carol.ryan@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
ADIDAS AG -1.03% 278.95 Delayed Quote.52.93%
ADIDAS AG (ADR) End-of-day quote.
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Financials (EUR)
Sales 2019 23 464 M
EBIT 2019 2 723 M
Net income 2019 1 923 M
Finance 2019 1 121 M
Yield 2019 1,40%
P/E ratio 2019 28,5x
P/E ratio 2020 25,4x
EV / Sales2019 2,30x
EV / Sales2020 2,17x
Capitalization 54 979 M
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Technical analysis trends ADIDAS AG
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Income Statement Evolution
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Mean consensus OUTPERFORM
Number of Analysts 35
Average target price 260,26  €
Last Close Price 279,75  €
Spread / Highest target 16,2%
Spread / Average Target -6,97%
Spread / Lowest Target -35,7%
EPS Revisions
Managers
NameTitle
Kasper Bo Rørsted Chief Executive Officer
Igor Landau Chairman-Supervisory Board
Harm Ohlmeyer Chief Financial Officer
Willi Schwerdtle Deputy Chairman-Supervisory Board
Wolfgang Jäger Member-Supervisory Board
Sector and Competitors
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