Adidas outruns rivals in tough markets

Published Aug 2, 2012

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By Victoria Bryan

FRANKFURT - World No.2 sporting goods maker Adidas said that a summer of sport was boosting demand for its three-stripe products, helping it stay a step ahead of rivals and avoid the worst of a slowdown in sales growth in China and Europe.

“If the world collapses it might hit us as well, but I do believe, without sounding too confident, that we are much better than our competitors,” Chief Executive Herbert Hainer said on Thursday, after forecasting 2012 earnings towards the top of its target range.

Shares in the German firm, a sponsor of the London 2012 Olympic Games and the Euro 2012 soccer tournament were down 1.6 percent at 1315 GMT, in line with a blue-chip DAX index that was dragged lower after comments from ECB president Mario Draghi.

While sporting goods companies have been benefiting from a string of major events, there are growing concerns that economic troubles in Europe and slowing growth in China will start to take their toll.

Commerzbank analyst Andreas Riemann said investors should cash in on profits now from Adidas shares, which have gained 21 percent this year, as slowing earnings momentum could soon catch up with high consensus expectations for Adidas.

Adidas said sales growth in China, where it and rivals are battling with local companies to win over the country's brand-hungry consumers, slowed to 13 percent in the second quarter from 26 percent in the first.

Sales in debt-ridden western Europe were up just 5 percent, compared with 7 percent in the first quarter.

Hainer said he believed Adidas had gained market share in key markets such as China, the United States and the UK from rivals, who have reported slower growth figures, or even declines in Europe in the case of Puma.

“In general the market might be tougher but all that I have heard from retailers is that we are the frontrunner in China,” he said.

Local rival Puma warned on profit last month as shoppers in Europe, its biggest market, held back on spending, while world No.1 Nike missed quarterly estimates and said orders for future delivery were slowing.

“Adidas is clearly outperforming Nike and Puma this year,” DZ Bank analyst Herbert Sturm said. - Reuters

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