Adidas Shares Jump on Company Aim to Increase Sales 50% by 2015
Adidas AG, the world’s second-largest sporting-goods maker, rose the most in more than a month in Frankfurt trading after saying it aims to increase sales as much as 50 percent in the next five years.
Adidas rose as much as 3 percent, the steepest intraday gain since Oct. 7. Revenue will rise to 17 billion euros ($23.7 billion) by 2015 and profit will advance faster than sales, Chief Executive Officer Herbert Hainer said today at an investor day at the company’s Herzogenaurach, Bavaria headquarters.
Adidas aims to boost revenue by selling more soccer gear and basketball jerseys in North America, China and Russia. The company wants to overtake Nike Inc. to become the world’s largest sporting-goods maker, though it didn’t give a timeframe for the target in its Route 2015 growth program.
“The targets are ambitious but achievable, as Adidas is well-positioned with its mix of lifestyle and performance products,” said Klaus Kraenzle, a consumer goods analyst at Silvia Quandt & Cie AG in Frankfurt.
The shares were up 96 cents, or 2.1 percent, at 47.26 euros at 2:16 p.m., the third-steepest advance in Germany’s benchmark DAX index. The gain extended this year’s rise to 25 percent.
Adidas had sales of 10.4 billion euros last year, or about 24 percent less than the $19 billion in revenue garnered by market leader Nike Inc., based in Beaverton, Oregon. Domestic rival Puma AG recorded 2.46 billion euros in sales.
The sporting-goods maker wants to gain market share in the running and basketball categories and also increase revenue in the sport-fashion segment that is a focus for Puma. The Reebok division of Adidas is set to become the world’s leading fitness and training brand, Hainer said.
“Over the last decade, we have fundamentally redefined the competitive landscape of our industry, distancing ourselves from once-close competitors,” the CEO said. It’s now a “two-horse global race,” he said, referring to his company and Nike.
Adidas has identified North America, Russia and China as growth markets where it plans to generate half of the sales increase by 2015, according to Hainer.
About 2,500 stores will be added in China in five years, focusing on “lower-tier cities,” Hainer said. Adidas plans to increase market leadership in Russia by 10 percentage points to about 70 percent by 2015 and to become the country’s biggest supplier of outdoor garments, he said.
The company’s operating margin will reach 11 percent in 2015 at the latest, the CEO said. The figure was at 5.05 percent last year and reached a record 10.66 percent in 2005, according to Bloomberg data.
Puma, which like Adidas is based in the Bavarian town of Herzogenaurach, said last month that it aims to boost annual revenue to 4 billion euros by 2015.
“Adidas’s growth plan is more realistic than Puma’s,” Silvia Quandt’s Kraenzle said.
To contact the editor responsible for this story: Celeste Perri at email@example.com.