By Tristan Veyet and Alessandro Parodi
Oct 21 (Reuters) - Adidas shares rose almost 3% on Wednesday after the German sportswear group raised its full-year outlook on the back of unscheduled preliminary earnings late on Tuesday.
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 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.
"Although the higher forecast mostly reflects the one-off US tariff refund, Adidas still benefited from improved full-price sell-through during the quarter," Metzler's Felix Dennl told Reuters, adding that this is likely to drive upgrades of about 4% to operating profit expectations.
The company has been investing in 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 to 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.
Excluding the tariff refund, third-quarter operating profit was 9% higher than expectations, J.P. Morgan analysts said. Including the refund, the earnings rose 37% to €1.01 billion ($1.13 billion), beating expectations of €742 million in an analyst consensus provided by the company.
($1 = 0.8912 euros)
(Reporting by Tristan Veyet in Gdansk and Alessandro Parodi in ParisEditing by Milla Nissi-Prussak, Louise Heavens and David Goodman)
