Adidas faces uphill fight against unpleasant exchange rates

Adidas Group’s sales remained flat in the third quarter on a currency-neutral basis, but declined by 6 percent in western Europe, partially due to the tough ongoing economic situation in certain countries in the region. On a currency-neutral basis, Eastern Europe was up by 2 percent, but North America was down by 5 percent, mainly because of difficulties experienced by TaylorMade-Adidas Golf in the challenging U.S. golf market. Turnover in Greater China increased by 9 percent. In terms of brands, the Adidas core brand managed stable sales, while Reebok was up by 5 percent and the golf division was substantially down by 16 percent. The Reebok-CMM Hockey unit improved by 4 percent in constant currencies. In reported terms, Adidas Group’s total sales softened by 7 percent overall and reached €3,879 million. Operating profit slipped by 6 percent to €463 million in comparison to last year’s third quarter, while third-quarter net income fell by 8 percent to €316 million. The gross margin improved, however, to 49.3 percent, compared to 47.7 percent in 2012. During the first nine months, the German group managed to maintain stable revenues on a currency-neutral basis thanks to a stronger performance of own retail operations, which jumped by 6 percent. Wholesale was down by 2 percent. In reported terms, though, Adidas Group’s overall turnover dropped by 4 percent to €11,013 million. Altogether, the company suffered from heavy currency effects. Basically business was up in nearly all regions in constant currencies. The most important exception was Western Europe, where sales were down by 9 percent in reported figures and by 8 percent in constant currencies, partly due to weaker sales in Italy, Spain and the U.K.

Adidas has suffered more in western Europe than in any other region of the world in its third quarter and this year's first nine months.

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