First-quarter profits at Adidas disappoint ahead of World Cup
Adidas, the world's second-biggest sporting-goods maker, reported first-quarter profits that missed analysts' estimates due to falling revenue at its TaylorMade golf business and the strong euro.
Profit after tax plunged 34pc to €204m, the German company said. Sales fell 6pc to €3.53bn.
Sales slid in nearly all divisions as consumers paused purchasing of football goods ahead of this summer's World Cup, and golf revenue declined 38pc – the result of increased discounting, according to analysts at Citigroup.
The relative strength of the euro against currencies in Asia and Latin America is diminishing reported sales from overseas and American rival Nike is making inroads in western Europe.
"A 3pc earnings-per-share decline in a quarter which should have benefited at least a little bit from the upcoming World Cup is disappointing," said Michael Kuhn, an analyst at Deutsche Bank.
The results increase pressure on chief executive Herbert Hainer to deliver his targets of €17bn in sales and an operating profit margin of 11pc next year, goals analysts said Adidas looks increasingly unlikely to meet.
"We consider the company's targets for 2015 to be very ambitious," Michael Gorny, an analyst at Bankhaus Lampe, said in an April 25 research note, adding that he doesn't expect the company to meet the targets before 2016.
Adidas said it is rejigging product releases and shipping schedules at TaylorMade, which accounted for 7.5pc of first-quarter sales. Business may improve ahead of the World Cup, as the company replenishes its retail pipeline and gets ready for "our largest football offensive ever," Mr Hainer said.