Adidas profit warning hits shares, puts 2015 goals under scrutiny

FRANKFURT Fri Sep 20, 2013 5:13am EDT

Adidias logos are seen on the company's building in Landersheim near Strasbourg March 31, 2009. REUTERS/Christian Hartmann

Adidias logos are seen on the company's building in Landersheim near Strasbourg March 31, 2009.

Credit: Reuters/Christian Hartmann

FRANKFURT (Reuters) - Shares in German sports apparel maker Adidas (ADSGn.DE) dropped sharply on Friday and its 2015 targets came under scrutiny on Friday after the group issued a unexpected profit warning.

Adidas, which has mostly exceeded sales and profit goals in the last couple of years, said late Thursday that weakening currencies in Russia, Japan, Brazil, Argentina and Turkey, a distribution problem in Russia and poor trading at its golf business meant targets were no longer attainable.

Its shares, which hit an all-time high of 88.50 euros at the start of August, dropped almost 6 percent in early trading to a three-month low and were down 4.4 percent at 78.95 euros at 0825 GMT (4.25 a.m. EDT).

In the statement late on Thursday, Chief Executive Herbert Hainer said the group remained confident about its 2015 "strategic aspirations", when it is hoping to achieve sales of 17 billion euros and an operating margin of 11 percent.

Analysts at UBS said that language appeared "understandably softer" and that to get to 17 billion would require compound annual sales growth of 8 percent.

Analysts now forecast on average sales of 16.7 billion euros for 2015, according to Thomson Reuters I/B/E/S data that takes into account some of the latest revisions.

Adidas' new forecast is for sales growth of a low single digit percentage this year. It also said it would not make its planned operating profit margin of near 9 percent this year, trimming it to 8.5 percent.

Analysts at Nomura said reaching the 2015 operating profit margin goal of 11 percent would require margin improvement of over 1 percentage point in 2014.

"The company remains confident on ... 2015 targets but in our view expectations may change," they said in a note to clients.

Rival Puma (PUMG.DE) has also stepped back from its 2015 targets following poor trading in Europe and the costs of a restructuring plan. It had previously planned to increase sales to 4 billion euros, but now says it is focusing on profitability instead.

(Reporting by Victoria Bryan. Editing by Jane Merriman)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.