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adidas 2009 third quarter sales decrease but CEO remains confident

During the third quarter of 2009, adidas Group sales declined 7 percent on a currency-neutral basis, with revenues for the adidas segment decreasing 6 percent on a currency-neutral basis.

Growth in the Sport Style division could not offset declines in major sports categories in the Sport Performance division. Currency-neutral revenues in the Reebok segment decreased 12 percent versus the prior year, as a result of declines in all divisions. Third quarter revenues for the TaylorMade-adidas Golf segment added to that, decreasing 12 percent on a currency-neutral basis, with adidas reporting this being mainly due to the challenging macroeconomic environment and the non-recurrence of sales related to several new product launches in the prior year period.

Group revenues decreased 6 percent in euro terms to EUR2.888 billion in the third quarter of 2009 from EUR3.083 billion in 2008, with the currency movement positively impacting the Group sales in euro terms.

“This year, our industry and our Group have faced unprecedented challenges. However, we have tackled the challenges head-on,” commented Herbert Hainer, adidas Group CEO. “We have successfully adapted to our difficult surroundings. And our drive for operational excellence has meant we have strongly improved our financial position generating almost EUR740 million in net cash from operations over the last six months.”

However, currency-neutral adidas Group sales declined in all regions except Latin America in the first nine months of 2009. Group sales in Europe decreased 8 percent on a currency-neutral basis, due to declines in most major markets impacted by the non-recurrence of strong prior year sales related to the UEFA EURO 2008™.

In North America, Group sales decreased 11 percent on a currency-neutral basis due to declines in both the USA and Canada.
Sales for the adidas Group in Asia decreased 9 percent on a currency-neutral basis, mainly as a result of declines in Japan and China. In Latin America, sales grew 19 percent on a currency-neutral basis, with double-digit increases in most of the region’s major markets, supported by the new Reebok companies in Brazil/Paraguay and Argentina.

In euro terms, sales in Europe decreased 9 percent to EUR3.442 billion in the first nine months of 2009 from EUR3.776 billion in 2008.

Sales in North America declined 3 percent to EUR1.822 billion from EUR1.871 billion in 2008. Revenues in Asia grew 1 percent to EUR1.894 billion in the first nine months of 2009 from EUR1.875 billion in 2008. Sales in Latin America grew 10 percent to EUR713 million from EUR647 million in the prior year.

Although adidas Group gross margin is forecasted to decline to a level between 45.0 and 45.5 percent, Herbert Hainer seems to be optimistic about the direction for the company: “Consumer and retailer sentiment still hovers between fear and optimism. However, we are well prepared to face any challenges thrown our way and I am cautiously optimistic. With a firm grip on inventories, a better financial position and a leaner organisation, we turn into the 2010 event year with innovative products, exciting concepts and clear focus on the tasks at hand.”


(Source: adidas Group)