PARIS — Adidas on Friday confirmed its full-year guidance following a solid first-quarter performance, with a 17.1% rise in net profits. Those were boosted by double-digit sales increases in its strategic growth areas of greater China and e-commerce, where sales grew 40 percent in the period.
“We confirm our full-year outlook and remain confident about the top-line acceleration in the second half of the year,” said Adidas CEO Kasper Rørsted in a statement, adding that “2019 will be an important milestone toward achieving our 2020 targets.”
The Herzogenaurach, Germany-based sporting goods firm said like-for-like net profits advanced to 633 million euros ($707.5 million) in the three months ending March 31.
Net sales rose 6.1% to 5.8 billion euros ($6.49 billion), bolstered by increases in both the Sport Inspired and Sport Performance categories. The latter was fueled by high-single-digit growth in the training and running categories, partially offset by a high comparative base in soccer due to the nonrecurrence of last year’s World Cup-related revenues.
Adidas’ gross profit margin — a key indicator of profitability — gained 2.5 percentage points to 53.6%, from 51.1% the year prior.
For 2019, the company said it continues to expect sales to increase at a rate of between 5% and 8% on a currency-neutral basis. Adidas flagged that it is experiencing a strong increase in demand for midpriced apparel, which it is not able to immediately satisfy in full due to supply chain shortages. As a consequence, the company expects sales growth of between 3% and 4% in the first half of 2019, followed by a sequential acceleration during the second half of the year.
For the full year, Adidas’ gross margin is forecast to rise to a level of around 52%, versus 51.8% in 2018, with the operating margin increasing between 0.5 percentage points and 0.7 percentage points to between 11.3% and 11.5%.
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This story was reported by WWD and originally appeared on WWD.com.
