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Outlook for Adidas disappoints in Olympic year


GERMAN sportswear group Adidas stuck to forecasts for a slowdown in sales growth in 2012, disappointing investors who had hoped for more in a banner year for sports events with the Olympics and European football championships.

The company said yesterday that sales growth would slow to 5-9pc on a currency-neutral basis from the 13pc reported for 2011. Analysts described this as a cautious move from a company that upgraded forecasts four times in 2011.


Smaller German rival Puma, controlled by French luxury goods group PPR, said last month it expected a near-10pc rise in group sales for 2012, while Nike in December said future orders were up 13pc.

"2012 guidance is seen as a little low -- it is below Puma guidance and below Nike order backlogs," Silvia Quandt analyst Mark Josefson said. Adidas, the world's second-largest sporting goods group behind Nike, grew sales and earnings to record levels in 2011, as consumers in China and Eastern Europe flocked to buy its three-stripe products.

Adidas shares, which touched record highs of above €60 in February, were down 2.1pc at €56.51, bucking the positive trend on Germany's Dax index of leading shares.

The three big sports brands have enjoyed strong growth over the last year, as fashion-conscious Chinese and Russian consumers snap up big brands, and running fans stock up on the latest high-tech products in the United States.

In 2012, the big sportswear brands are courting soccer fans ahead of the UEFA European championships in Poland and Ukraine which start in June.

Adidas is an official sponsor of the tournament and also supplies kit to European and world champions Spain as well as Germany, another of the tournament favourites.

It has previously said it expects record sales of over €1.5bn. Rival Puma is stepping up investments, signing deals with players such as Barcelona's Cesc Fabregas and the Italian soccer federation.

Analyst Chris Walker of Nomura said that Adidas's gross margins were slightly lower in the fourth quarter and noted that the stock had enjoyed a strong run.

"It's probably more that expectations were elevated," he said of the share price reaction.

"The full year results were in line with expectations and broadly in line with company guidance," added Mr Walker, who rates the stock a "buy".

"It's an exciting year for the company. They will probably have to weight more of their marketing spend to the early quarters to get maximum benefit," he added.

Adidas is a sponsor of the London Olympics and is supplying kit to the host nation, Team GB.


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