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Adidas Can’t Put a Foot Wrong Right Now

Adidas Lowers It's Yearly Outlook Based On Turmoil In RussiaAdidas Lowers It's Yearly Outlook Based On Turmoil In Russia
Faster, higher, stronger...Photograph by Spencer Platt — Getty Images

German sporting goods group Adidas AG (ADDYY) raised its 2016 guidance for a fourth time this year after reporting a 21 percent jump in second-quarter sales, among other helped by the European soccer championships in France.

Shares rose around 4 percent in early trade, making them the biggest gainers on Germany’s blue-chip DAX index.

The group said on Thursday it now expected its 2016 currency-adjusted sales to grow at a rate in the high teens, compared with previous guidance for a 15 percent increase.

It now also sees net profit from continuing operations rising at a rate of between 35 and 39 percent, up from a previous forecast for 25 percent growth.

In the second quarter, Adidas saw strong sales of soccer gear, running shoes and lifestyle products in all regions.

 

Last month, Adidas said that it expected sales of soccer boots, shirts and balls to rise 14 percent to a new record of 2.5 billion euros ($2.77 billion) in 2016, helped by reclaiming leadership of top European markets for soccer footwear from arch rival Nike Inc (NKE).

Adidas had long been the world’s top soccer brand, but it was overtaken in the market for boots in 2014, prompting Adidas to launch popular new ranges and to focus its marketing spending on more top teams and players.

But Adidas also benefited from a positive financial impact of the termination of a contract with London-based soccer club Chelsea, which helped double its second-quarter profit to 291 million euros.

Adidas announced in May an early end to its shirt sponsorship deal with the English soccer club as part of a shift to partner with fewer clubs to reduce the portion of its marketing budget for sports deals, as it increases spending on pushing the brand directly on social media, in stores and at grassroots sporting events.

By contrast, rival Nike’s second-quarter revenue growth and its forecast for future orders missed analysts’ estimates, underscoring the sportswear maker’s struggle to fend off competition from Adidas and others, especially in its home turf of North America.