By Tristan Veyet and Alessandro Parodi
Oct 21 (Reuters) - Adidas shares rose 2.4% in early trade on Wednesday, after the German sportswear group raised its full-year outlook on the back of unscheduled preliminary earnings which beat market expectations.
Including a one-off US tariff refund of €200 million in the third quarter and a planned €100 million reinvestment in the fourth quarter, Adidas now expects annual operating profit of €2.5 billion, up from its previous target of €2.3 billion.
The company
has been investing in rolling out new styles as the popularity of its Samba and Gazelle sneakers gradually fades, including the launch of its lightest‑ever racing shoe, the Adizero Adios Pro Evo 3, which helped Kenyan runner Sabastian Sawe crack the two‑hour marathon barrier in April.
Adidas had hoped to build on a strong World Cup showing to stay ahead of Nike and other rivals, but provided in July a post-World Cup revenue outlook that disappointed the market.
"The footwear lifestyle business is currently challenging, mainly due to too much inventory and too much discounting in the marketplace, but we know this will soon normalise again," Adidas CEO Bjorn Gulden said in a statement on Tuesday.
When excluding the tariff refund, third-quarter operating profit came in 9% higher than expectations, J.P. Morgan analysts said. Including the refund, the earnings rose 37% to €1.01 billion ($1.13 billion), beating analyst expectations for €742 million in a consensus provided by the company.
The surprise update provided “another compelling proof point of Adidas continuing to expand market share while delivering profitable growth amid a challenging environment”, Metzler analysts said in a note to investors.
However, the higher forecast mostly reflects the one-off US tariff refund rather than stronger underlying trading and may have limited impact on market expectations, Metzler analyst Felix Dennl said.
($1 = 0.8912 euros)
(Reporting by Tristan Veyet in Gdansk and Alessandro Parodi in Paris, editing by Milla Nissi-Prussak and Louise Heavens)
