Adidas Cites Russia & Golf For Profit Change
German sportswear brand, adidas, has warned it will miss its profit targets for the year – citing the rising tensions in Russia and a declining golf business – and now expects profits of around $869 million, compared with the $1.1 billion to $1.2 billion it had previously stated.
Adidas posted sales growth of 10% in the second quarter, but expects that rate to slow to mid- to high-single digits for the rest of the year.
CEO Herbert Hainer admitted that Adidas had ‘not executed to our high standards at all times or provided enough flexibility to react in adverse market conditions.’
‘We are taking consequent and necessary decisions now to put the Group on a firmer footing to build for the future.’
According to a statement from the brand, rising tensions in Russia and region are expected to dampen consumer sentiment in the country, and the company is adjusting its plans and will reduce store openings in the region for 2014 and 2015 while further increasing the number of store closures.
‘These steps are aimed to reduce risk and protect profit as well as to drive a faster implementation of new inventory management principles for that market,’ the company said in a statement.
Overall sales growth is also under pressure from the golf segment. In the second quarter, TaylorMade-Adidas Golf sales dropped 18% compared to Adidas’ 14% sales growth and Reebok’s 9% gains.
