Adidas reports sales growth

14 Mar 2018

German sportswear company Adidas has reported significant year-on-year increases in net sales and operating profit as it disclosed a scheme to buy back up to €3bn worth of its shares.

Adidas today (Wednesday) revealed its full-year financial results for 2017 just hours after disclosing its buy back plans. The company reported net sales of €21.218bn for 2017 versus €18.483bn in 2016, while operating profit was placed at €2.07bn, a 30.8 per cent increase on last year’s figure.

Currency-neutral revenues rose by 16 per cent, with the company stating this was mainly driven by an 18 per cent increase at its core Adidas brand through double-digit sales increases in the running category as well as at Adidas Originals and Adidas neo. In addition, high-single-digit sales increases in the training category also contributed to this development.

However, while the brand's international revenues grew at a double-digit rate in 2017, sales in the US declined, reflecting the significant amount of store closures in the market. From a channel perspective, the company's revenue growth was driven by double-digit increases in all distribution channels, with particularly strong support from e-commerce, where revenues grew 57 per cent.

Looking forward, Adidas has projected slower sales and profit growth for 2018, but raised its 2020 profitability estimations. Adidas said its currency-neutral sales are expected to rise around 10 per cent in 2018, up from 9.8 per cent in 2017.

The company has also realigned its 2020 profitability target, aiming for net income from continuing operations to grow by an average of 22 to 24 percent per year, versus the previous target of 20-22 per cent.

Adidas chief executive Kasper Rorsted said: “2017 was a strong year - financially and operationally. We made great progress toward achieving our mission to be the best sports company in the world. Our strategic growth areas - North America, Greater China and digital commerce - were the main drivers of our performance.

“2018 is a key milestone on the road to achieving our long-term targets for 2020. We expect quality growth, with over proportionate bottom-line improvements. This will enable an even stronger increase in profitability by 2020 and allows us to upgrade our long-term target yet again.”

Meanwhile, Adidas’ multi-year share buyback program of up to €3bn in total will run through until May 11, 2021. Starting on March 22, Adidas plans to buy back shares worth up to €1bn in 2018. The scheme involves the repurchase of up to 10 per cent of the company's share capital on the stock exchange.

“The sizable multi-year buyback program shows the confidence in our strategy 'Creating the New',” Harm Ohlmeyer, chief financial officer of Adidas, said. “We will continue to relentlessly drive operating cash flow, while at the same time investing back into our company to provide for future growth. The buyback complements our stated dividend policy, underscoring our commitment to continuous shareholder return.”