Adidas sees hit from emerging market currency swings
By Emma Thomasson
HERZOGENAURACH, Germany (Reuters) - German sportswear company Adidas (ADSGn.DE: Cotización) on Wednesday warned that weakening emerging market currencies, notably the Russian ruble, would hurt 2014 results and pose a risk to its 2015 targets even as sales are helped by the soccer World Cup.
The world's second biggest sportswear firm, which has been losing ground to market leader Nike (NKE.N: Cotización), makes about half of its sales in fast-growing emerging markets, where currencies have been sliding in recent months.
"The currency situation, as it is right now, represents a significant risk to the achievement of our goals," Chief Executive Herbert Hainer told a news conference.
"We cannot ignore the significant weakness of the Russian ruble since the beginning of the year as well as the current uncertainty in the region, both of which have added considerable risk to our results in euros."
Adidas has set targets for 2015 sales of 17 billion euros ($23.4 billion) and an operating margin of 11 percent - both ambitious given a new margin target of 8.5-9 percent for 2014 and 2013 sales falling 3 percent to 14.5 billion euros.
Nike, which has been encroaching on Adidas' home territory in western Europe and challenging its dominance in the soccer market, hopes to add $10 billion in sales by 2017 to reach $36 billion after $25.3 billion in fiscal 2013.
Nike saw total revenue rise 8 percent to $6.43 billion in the quarter ended November 30, as sales in western Europe grew 12 percent. Adidas said sales in western Europe rose 1.9 percent in its fourth quarter to December 31, but fell 7 percent for the year.
Adidas shares, which have fallen 10 percent this year on currency concerns to make the company one of the worst performing German blue-chip stocks, were down 1.1 percent at 1030 GMT, against a German market off 0.3 percent .GDAXI. Continuación...