Adidas scores profit boost with World Cup

Germany sporting goods firm Adidas on Thursday said the World Cup in Russia and strong e-commerce sales lifted net profit in the second quarter, keeping the company on track to meet its 2018 goals.

Net profit at the Bavaria-based company more than doubled to 396 million euros ($459 million) between April and June, up from 158 million the previous year.

Group revenues climbed four percent to 5.3 billion euros year-on year, powered by brisk demand in the key North American and Chinese markets as well as by online sales.

A major growth driver in the second quarter was the World Cup football extravaganza, which helped drive a double-digit increase in sales in Russia alone.

As well as supplying the footballs, Adidas sponsored 12 of the 32 teams in the tournament, allowing it to shrug off Germany’s embarrassingly early exit.

“We delivered another strong quarter on the back of a successful World Cup activation,” said chief executive Kasper Rorsted in a statement.

The group also benefited from higher prices for “top-line” sportswear and sneakers, which helped offset negative currency effects and marketing spending linked to the World Cup.

But sales at the group’s struggling US sports subsidiary Reebok fell three percent to 387 million euros, despite a major overhaul.

Adidas also said it had incurred a one-off charge related to Reebok, after German financial regulators forced the group to make accounting changes to its 2016 financial statement over the value of the Reebok trademark.

Adidas said it would take a retroactive hit “in the mid-triple digit million euro range” from the impairment charge, but this would not impact the company’s 2018 guidance.

Looking ahead to the full year, Adidas still expects a roughly 10-percent increase in worldwide currency-adjusted sales, fuelled by North America and Asia-Pacific.

Investors were impressed with Adidas’ performance, sending shares soaring 9.2 percent to 208.10 euros in early trading in Frankfurt, against a DAX blue-chip index narrowly in the red.