Adidas Earnings Increase, Raises 2016 Guidance
Adidas AG based in Germany continued its turnaround. On Wednesday, the sports shoe and apparel makers increased its 2016 guidance for a second time in the past few months thanks to a jump in earnings.
The second largest sporting good business in the world, after Nike, posted a rise of 38% in its net profit to 350 million euros or $395 billion, which beat expectations on Wall Street. Revenue was up by 17% when adjustments were made currency fluctuations.
The company said it was now expecting its sale, currency adjusted, in 2016 to increase by 15% and its net profit by 15% to 18%.
Shares of the company were 6.4% higher on Wednesday mornings, which led gainers on the blue-chip index in Frankfurt.
The sportswear maker from Germany has enjoyed strong momentum of late. In December, Herbert Hainer the departing CEO said he expected a record year in 2016 for the business.
The good news of recent has come during a convenient time for Hainer, who will leave Adidas during October following a 15-year stint leading the company.
Approximately one year ago, the CEO’s situation was far different.
Due to some currency losses across Russia, a poor performance in the U.S. and dropping sales in gold apparel and equipment, Hainer slashed his financial targets for both 2014 as well as 2015.
Hainer issued two profit warnings that surprised many in a year investors were expecting a strong result due to the World Cup being played in Brazil.
Suddenly, the activist investors started raising concerns about the management skills of Hainer. Some demanded he leave.
Hainer refused to and learned from his mistakes as he told them at that time. He promised the new game plan he had was already under way.
Since that time, Hainer has reshuffled management in the North American part of the company, boosted the budget for marketing, started developing local as well as in-store production facilities and attempted to enhance the brand awareness through endorsement deals with high profile athletes and pop stars in the U.S.