Adidas, facing investor unrest over Nike lead, sees sales dip
By Emma Thomasson
BERLIN (Reuters) - German sportswear company Adidas reported disappointing first-quarter results on Tuesday due to a big drop in sales at its TaylorMade golf business, but said a stronger second quarter was signaling a return to growth.
The world's second-biggest sportswear firm, which has been losing ground in its home territory of western Europe to U.S. giant Nike, said operating profit fell almost a third to 303 million euros ($420 million), missing average analyst forecasts for 318 million.
It said 80 million euros of the decline was due to a poor quarter at TaylorMade due to a change in shipping cycles and a declining U.S. golfing market, and 50 million from negative currency movements - particularly the recent drop in the Russian rouble.
But Chief Executive Herbert Hainer said those factors masked strong performances in emerging markets and the company's own retail network, which saw currency-neutral sales jump 22 percent, and confirmed the group's guidance for a "high single-digit" increase in currency-neutral sales in 2014.
"While we still have to be wary of currencies and their effects on our financials, the first quarter will be the low point of our performance. I expect a strong second quarter to point the way forward," he told a media conference call.
That may not be enough to mollify investors who have called for revolt at Thursday's annual general meeting over Hainer's failure to stop the advance of Nike, which extended its lead to take 15 percent of the global sportswear market in 2013 compared with 10.8 percent for Adidas, according to Euromonitor.
In addition to taking on Adidas on its home turf, Nike has challenged the German firm's dominance in the soccer market, reporting a better than expected profit for the quarter ended February 28, helped by a large jump in revenue in western Europe.
Ingo Speich, a fund manager with Union Investment which has a 0.89 percent stake in Adidas and is its tenth biggest investor, said he could not understand why the board decided in March to extended the contract of Hainer - in the job since 2001 - until 2017. Continuación...