Adidas Releases Lower Forecast for Growth in Sales and Profit

Sportswear maker Adidas has released its forecast for growth in sales and profit for 2018, but the numbers are less than those of 2017, as the Germany-based company posted sales for its fourth quarter that fell short of forecasts by analysts and a net loss because of the one-off hit it took for the new U.S. tax legislation.

Adidas, which has watched its shares drop by 15% over the last six months as growth started to cool, said late Tuesday night that it is planning a share buyback of as much as €3 billion equal to approximately $3.72 billion by the year 2021, or equal to almost 9% of share capital in the company.

Adidas on Wednesday said that its sales for its fourth quarter had increased by 12% to just over €5.06 billion, a rise based on currency-neutral effects of 19%, but came up short of expectations on Wall Street for sales of €5.13 billion.

It posted an operating profit that was more than tripled that of the same quarter one year ago, of €132 million, which beat expectations of analysts who had forecasted €61 million. However, Adidas recorded a €41 million net loss after taking a tax impact from the new U.S. tax laws of €76 million.

Kasper Rorsted the CEO of Adidas said the he would argue that while the company may have come up short where analysts were concerned it grew 16% on its top line and by 32% on its bottom line making the company very happy with the year-end results.

Rorsted added that the company needed to ensure that the business grows and that the bottom line grows quicker than that of our competitors and that is what is happening and eventually it will be reflected in the price of our shares.

For 2018, Adidas forecast sales, based on currency-neutral impact, to rise by approximately 10%, with its operating margin increasing by 10.3% to 10.5% from the 2017 margin of 9.8%. Net profit said Adidas from its continuing operations will increase 13% to 17% during 2018.

Competition has headed up in the sportswear and athletic footwear industry with Nike, Adidas, and Under Armour all battling to earn a larger share of the market.

The industry has several other smaller players in the athletic footwear sector, while the sportswear sector is dominated by the big three.