August 4, 2011 / 7:36 AM / 6 years ago

Fitness fiends in China, U.S. drive Adidas sales

<p>A shoe of the Adidas fashion line is pictured in a Munich shoe shop March 3, 2010. REUTERS/Michaela Rehle</p>

FRANKFURT (Reuters) - Adidas (ADSGn.DE) raised its year forecasts again on Thursday after demand for its three-stripe branded sportswear from Chinese and U.S. customers led to a 5 percent rise in second quarter sales.

Adidas, the world’s second-largest sports clothing company after Nike (NKE.N), has already raised its sales outlook twice this year as demand for sportswear soars.

“Why are people buying? It keeps them healthy and fit and this is what people want, they want to enjoy their life,” Chief Executive Herbert Hainer told journalists. He said running shoes and sports fashion products were selling especially well.

The German group said it now expects sales this year to be up 10 percent and earnings per share up by 15 percent, with demand in North America also remaining strong.

That compares with previous forecasts for sales to increase by a high single-digit percentage rate and earnings by between 10 and 15 percent.

Hainer said Adidas was taking market share from its main competitors in a lot of countries and shrugged off concerns over the U.S. debt crisis, saying that its customers were still buying brand new styles as soon as they hit the shelves.

“No matter which retailer I speak to, or which market share statistic I read, our product sell-throughs are stronger than they have ever been,” he said.

Its shares rose as much as 4 percent and were among the top German blue-chip gainers, up 1.9 percent by 1036 GMT.

“It’s certainly a good sign when a company raises its outlook in the current financial climate,” a Frankfurt-based trader said.

While Nike and smaller German rival Puma (PUMG.DE) have also raised their sales outlooks this year, margin growth will be more tricky given high costs for materials such as cotton, rubber and polyester.

Like many consumer goods companies, they have all reacted by increasing prices. Unilever on Thursday said price rises had protected its profits.

Adidas also said sales in Japan have recovered more quickly than it originally expected following the March earthquake and that it now expected a decline in sales of under 10 percent.

It had previously forecast a 15-25 percent drop in sales in the market, one of its most profitable.

Adidas said second-quarter sales rose 5 percent to 3.06 billion euros ($4.36 billion) while its operating profit was up 12 percent to 219 million.

Analysts were on average expecting second-quarter sales of 3.07 billion euros and operating profit of 222 million according to a Reuters poll.

Sales in China in the quarter to end June jumped 41 percent, while North American sales rose 5 percent.

Hainer said these growth rates would not continue in China over the second half as comparatives got tougher, but said the group still expected double-digit growth there.

($1=.7017 euros)

Reporting by Victoria Bryan; Editing by Greg Mahlich and Erica Billingham

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