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Mar 5, 2015
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Adidas optimistic for 2015 amid focus on U.S. market

By
Reuters
Published
Mar 5, 2015

BERLIN, Germany - German sportswear company Adidas expects robust sales and profit growth in 2015 as consumer confidence improves around the world and it redoubles its efforts in North America, where it has fallen further behind fierce rival Nike.

"North America will be a key priority for us in 2015," Chief Executive Herbert Hainer told journalists in a conference call. "We want and we need to win in that market."

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A new focus on the key U.S. market is expected to be a major part of a new five-year strategic plan Hainer is due to launch on March 26 and could also be decisive as the Bavaria-based company looks for a successor to its long-serving CEO.

Adidas managed to slow its decline in North America in the fourth quarter, with sales down a currency neutral 4.2 percent, compared to a 7 percent drop in the first nine months when its struggling golf business weighed on results.

Adidas has already moved several executives to its U.S. base in trendy Portland, home to Nike, as it seeks to reverse its decline in the world's top sportswear market, important not only for sales but also for setting global trends.

Other initiatives include signing more U.S. athletes, hiring new designers and investing in sports like baseball, basketball and American football.

Adidas said last month its board had launched a formal search for a successor to Hainer, in the job since 2001, who has faced criticism for failing to dent Nike's dominance of its home market despite buying U.S. brand Reebok in 2006.

However, Hainer, whose current contract lasts until 2017, said on Thursday that did not mean his departure was imminent: "You will have to bear with me still for some time."

The company said a second tranche of a share buyback programme would start on Friday. This helped its shares, down 12 percent in the last year due to the weak rouble and a series of profit warnings, rise 3.7 percent.

Adidas said it expects 2015 sales to rise at a mid single-digit percentage rate on a currency neutral basis, after a 6 percent increase in 2014, while net profit from continuing operations should climb 7-10 percent.

It hopes to more than compensate for the non-recurrence of sales from last year's soccer World Cup due to rising consumer confidence around the world, a recovery at its revamped golf unit and an expansion of retail selling space.

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Hainer said Adidas had got off to a "fantastic start" to 2015 in lifestyle due to its "superstar" campaign featuring celebrities like Pharrell Williams and Kanye West, whose new "Yeezy" sneaker sold out via a special app even before its official launch.

He expects the TaylorMade golf unit to return to top and bottom-line growth in a "more stable" golf market and expects sales to be supported by the expansion of its own stores, which already accounted for more than half of revenues in 2014.

Despite uncertainty due to the Ukraine crisis, Hainer said he was still confident of the long-term potential of the Russian market, adding Adidas was opening more stores in Moscow and was already preparing for the 2018 World Cup in the country.

As for the group's 2014 Q4 and FY financial results, Hainer said, "2014 was a year with ups and downs for the adidas Group. But we tackled the challenges
resolutely and achieved our adjusted top-and bottom-line targets."

"In the fourth quarter, we grew at double-digit rates in Western Europe, Greater China, European Emerging Markets and Latin America. This shows that the momentum at adidas and Reebok is fully intact."

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