Adidas stock drops despite sales and strong growth in the US

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Adidas

The stock fell early in trading on Wednesday despite the German sportswear company beating earnings and sales expectations.

The company returned to growth in Europe, recorded a 10% increase in sales in North America and noted a “significant acceleration” in the fourth quarter.

However, the stock lost 3.3% as net profit fell and the results did not thrill investors.

The comeback story. Adidas stock has climbed nearly 50% so far this year despite supply chain issues in the United States

The German sports retailer has gained ground on


Nike

in the United States, but its rival has seen strong growth in China and Europe.

Adidas struggled in Europe, with sales down 3% in the first quarter and remained stable in the second. He warned that margins would be squeezed in the second half of the year due to rising sourcing costs and falling prices.

What’s new. Revenue increased 6% to 6.41 billion euros in the third quarter, ahead of the estimate of 6.32 billion euros from financial data firm FactSet, as European sales return to growth and North American sales climbed 10%.

Operating profit of 897 million euros also exceeded expectations, as did net profit, which fell 2% to 644 million euros, which the company said was in part due to a new accounting standard.

The German sportswear company’s brand Reebok recorded a surprising 2% sales increase.

Combined sales of Adidas and Reebok saw double-digit growth in North America and Russia, while revenues in Greater China rose 11%, decelerating amid unrest in Hong Kong.

The company confirmed its annual outlook of a 5% to 8% increase in sales and a net profit of between 1.88 billion euros and 1.95 billion euros, predicting a “significant” acceleration in the fourth trimester.

He also said he expects a boost from next year’s European Football Championship.

Look forward. After a difficult start to the year, Adidas responded in the United States with strong sales growth and returned to growth in Europe. The company appears poised to capture new market share in key regions, including North America, and benefit from structural growth in China. The strong growth of e-commerce also allows Adidas to position itself well.

James T. Quintero