Adidas raised its full-year outlook after unscheduled preliminary earnings beat market expectations, and its shares rose in early trade. Metzler analyst Felix Dennl said the higher forecast mostly reflects a one-off US tariff refund and may have limited impact on market expectations.
Adidas shares rose 2.4% in early trade on Wednesday. The German sportswear group lifted its full-year outlook after releasing unscheduled preliminary earnings that beat market expectations.
Guidance rises to €2.5 billion
The company now expects annual operating profit of €2.5 billion, up from its previous target of €2.3 billion. The figure includes a one-off US tariff refund of €200 million in the third quarter and a planned €100 million reinvestment in the fourth quarter.
Third-quarter earnings rose 37% to €1.01 billion ($1.13 billion) including the refund. That beat analyst expectations for €742 million in a consensus provided by the company. Excluding the refund, third-quarter operating profit came in 9% higher than expectations, J.P. Morgan analysts said.
Analysts weigh the one-off boost
Metzler analysts called the update another compelling proof point of Adidas continuing to expand market share while delivering profitable growth amid a challenging environment. However, Metzler analyst Felix Dennl said the higher forecast mostly reflects the tariff refund rather than stronger underlying trading and may have limited impact on market expectations.
The company is investing in new styles as the popularity of its Samba and Gazelle sneakers gradually fades. Those launches include the Adizero Adios Pro Evo 3, its lightest-ever racing shoe, 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 in July it provided a post-World Cup revenue outlook that disappointed the market.
CEO Bjorn Gulden said in a statement on Tuesday: "The footwear lifestyle business is currently challenging", citing mainly too much inventory and too much discounting in the marketplace.
Source: Reuters via Investing.com
Trading involves risk.
Risk Disclaimer
