Adidas beats the Street, sees ecommerce as “future for a lot of markets”
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Adidas beats the Street, sees ecommerce as “future for a lot of markets”

Adidas continued a three-year comeback run of epic proportions last week. The fashionable sportswear company, known for its sneakers and soccer sponsorships, extended a US recovery that has seen its sales double over the past three years with a “record year” in 2018. And top of Adidas’s agenda for the future? The enormous potential of ecommerce.

Adidas’s share price has appreciated by 16% so far this year

18 03 adidas

Source: Yahoo Finance

Adidas beat the Street on earnings and sales, causing the company’s CEO Kasper Rorsted to praise 2018 as “by far the best year in the history of our company.” Initially, investors’ cheer was cooled by concerns that momentum in the US might be slowing – but the share price shot back up a day later, signalling that the results were strong enough to more-than compensate for such worries.

Profit for the year hit 108 million euros, easily surpassing analysts’ expectations of 88 million euros. Sales in the fourth quarter also beat consensus estimates, coming in 5% higher year on year and hitting 5.32 billion euros. Speaking to the strength of these results, Rorsted said:

“2018 was a record year for the adidas brand in North America and we’re proud of our growth in the largest sporting goods market in the world. We’re especially proud of our people, who made these great results happen, and initiatives like She Breaks Barriers, which raises awareness of the challenges women and girls face in sport.”

Rorsted would go on to praise operations in each region, adding that the company had missed out on a couple of percentage points of growth so far in 2019 through being unable to meet demand for its products. The one area in which Adidas was less-than stellar was Europe – although Rorsted was resolute that investors would see the brand “return to growth” on The Continent imminently. Of all the comments he made on the back of the results, the following, where he discusses Adidas’s ecommerce ambitions, might be the most interesting:

“We launched our own app last year, and it's been downloaded more than 7 million times in more than 25 countries. We think e-commerce is still in its early days, and there's going to be a tremendous opportunity – but you have to couple it with big franchise stores or flagship stores where you can see the product. But there is no doubt e-commerce and e-commerce through a mobile environment is the future of our company.”

Disclosure

Dominion holds Adidas in its Global Trends Luxury Fund.


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