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Details on Industry Insight.
Group sales increase 18% on a currency-neutral basis
Net income attributable to shareholders up 25% to € 209 million
adidas Group increases full year sales guidance
• Comparable Retail store sales grow 17% currency-neutral
• adidas and Reebok sales increase 18% and 24% respectively
• Gross margin almost unchanged at 48.5% despite higher input costs
• Operating margin up on a comparable basis
• Net borrowings down 33% to € 914 million at quarter-end
adidas Group currency-neutral sales increase 18% in the first quarter of 2011
In the first quarter of 2011, Group revenues grew 18% on a currency-neutral basis as a result of double-digit sales increases in Wholesale, Retail and Other Businesses. Currency translation effects had a positive impact on sales in euro terms. Group revenues grew 22% to € 3.273 billion in the first quarter of 2011 from € 2.674 billion in 2010.
“We are off to a powerful start in 2011 with record first quarter results,” commented Herbert Hainer, adidas Group CEO. “Strong double-digit growth in key markets such as North America, Greater China and Russia and the successful introduction of new products and campaigns by adidas, Reebok and TaylorMade underline the strength and desirability of our Group brands all around the globe.”
Wholesale and Retail segments drive strong sales growth in Q1
In the first quarter of 2011, currency-neutral Wholesale revenues increased 18% due to double-digit sales growth at both adidas and Reebok. Currency-neutral Retail sales increased 22% versus the prior year, mainly as a result of double-digit growth of comparable store sales. Revenues in Other Businesses were up 14% on a currency-neutral basis, driven by double-digit sales increases at TaylorMade-adidas Golf.
Currency translation effects had a positive impact on segmental sales in euro terms. Wholesale revenues increased 22% to € 2.320 billion in the first quarter of 2011 from € 1.898 billion in 2010. Retail sales rose 26% to € 577 million versus € 459 million in the prior year. Sales in Other Businesses grew 19% to € 376 million in the first quarter of 2011 (2010: € 316 million).
Currency-neutral sales increase in all regions
In the first quarter of 2011, currency-neutral adidas Group sales grew in all regions. Revenues in Western Europe increased 14% on a currency-neutral basis, primarily as a result of double-digit sales growth in Germany, France and Italy. In European Emerging Markets, Group sales increased 26% on a currency-neutral basis due to growth in most of the region’s markets, in particular Russia. Sales for the adidas Group in North America grew 26% on a currency-neutral basis driven by a 30% sales increase for adidas and 22% sales growth for Reebok. Sales in Greater China increased 36% on a currency-neutral basis. Currency-neutral revenues in Other Asian Markets grew 7% due to increases in most markets, in particular South Korea. In Latin America, sales grew 15% on a currency-neutral basis, with double-digit increases in most of the region’s major markets. Currency translation effects had a positive impact on regional sales in euro terms.
Group gross margin almost unchanged at 48.5%
The gross margin of the adidas Group decreased 0.1 percentage points to 48.5% in the first quarter of 2011. Higher input costs were offset by the positive impact from less clearance sales as well as a larger share of higher-margin Retail sales. Gross profit for the adidas Group grew 22% in the first quarter of 2011 to € 1.587 billion versus € 1.300 billion in the prior year.
Operating profit increases 21%
Group operating profit increased 21% to € 313 million versus € 260 million in 2010. As a percentage of sales, the operating margin of the adidas Group was down 0.1 percentage points to 9.6% in the first quarter of 2011 (2010: 9.7%). This development was primarily due to the non-recurrence of prior year positive effects related to the settlement of a lawsuit and the divestiture of a trademark, which more than offset lower other operating expenses as a percentage of sales. Excluding these effects, on a comparable basis, the Group’s operating margin was up around 1.0 percentage points.
Financial income down 61%
Financial income decreased 61% to € 5 million in the first quarter of 2011 from € 12 million in the prior year, mainly due to the non-recurrence of positive exchange rate effects in the prior year.
Financial expenses increase 14%
Financial expenses increased 14% to € 33 million in the first quarter of 2011 (2010: € 29 million), mainly as a result of negative exchange rate effects. Excluding these effects, financial expenses decreased 16%.
Income before taxes increases 17%
Income before taxes (IBT) for the adidas Group increased 17% to € 285 million from € 243 million in 2010. IBT as a percentage of sales declined 0.4 percentage points to 8.7% in the first quarter of 2011 from 9.1% in 2010. This was primarily a result of the Group’s operating margin decrease and the lower financial result.
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