Adidas Raises 2015 Forecasts, Plans to Cut Jobs at Golf Unitby
Sales in Europe, Latin America, China lifted third quarter
Sportswear maker to cut jobs at troubled golf division
Adidas AG raised its full-year forecasts and said it’s cutting jobs at its languishing golf-gear division as the German sportswear maker tries to appease investors pushing for faster change.
Adidas is raising its full-year revenue, gross margin and net income targets, Herzogenaurach-based Adidas said in a statement Thursday. The company reported a 10 percent gain in third-quarter profit that beat analysts’ estimates, led by sales growth in western Europe and China. The shares rose as much as 4.3 percent to an eight-month high.
Chief Executive Officer Herbert Hainer is trying to turn around Adidas after a dismal 2014 and as the company seeks his successor after almost 15 years under his leadership. Adidas has streamlined its soccer shoe lineup and is seeking a buyer for parts of its struggling golf business. Investors such as Southeastern Asset Management Inc. are pressing for an outsider to revamp the athletics wear maker.
“The third-quarter numbers let Hainer gain some more time,” said Cedric Rossi, an analyst at Bryan Garnier & Co. in Paris. “The strategy unveiled in March is starting to yield some results.”
Adidas said it will cut 14 percent of the jobs at the golf unit this year as it expects full-year revenue of the business to decline.
Adidas said it expects “high single-digit” revenue growth excluding currency changes, up from a previous forecast for mid-single-digit growth. Net income from continuing operations and adjusted for goodwill impairment will rise about 10 percent, Adidas said.
Third-quarter profit was 311 million euros ($338 million), compared with analysts’ average estimate of 301 million euros, according to data compiled by Bloomberg. Sales rose 18 percent to 4.76 billion euros, topping analysts’ average 4.51 billion euro estimate. Revenue growth excluding currency shifts in Western Europe, Latin America and China was double digit.
The company also said it would extend the contract of Roland Auschel, head of global sales and a candidate to succeed Hainer, by three years to 2019. The contract of Eric Liedtke, another director considered a candidate for the top job, expires in March 2017, as does Hainer’s.
Last week, Nassef Sawiris, Egypt’s richest man, emerged as Adidas’ biggest shareholder, with 6 percent of the voting rights. Sawiris has taken an active role at companies he buys stakes in, including cement maker LafargeHolcim Ltd. and building-materials company Texas Industries Inc.
“We are reaching the 2015 goal line much faster than we had anticipated,” CEO Hainer said in the statement. “We will not rest on our laurels.”