The Adidas Group continues to defy pressures on the European market, with significant sales increases in all parts of Europe in the third quarter. They contributed to a sales rise of 8.0 percent to €3,744 million for the group in the three months, equivalent to an increase of 13 percent in constant currencies.

The group's sales in Western Europe were up by 9.9 percent to €1,211 million for the quarter, a rise of 10.2 percent in constant currencies. With soaring sales in Russia, the company managed a sales jump of 22 percent in constant currencies in European emerging markets, which meant an increase of 9.5 percent in euros to €438 million.

Herbert Hainer, the group's chief executive, said in a conference call that its European sales increase was spread broadly, coming from nearly all countries and categories. Germany and France both enjoyed double-digit growth, while Italy and Spain managed a high-single-digit sales hike. The group expanded in the U.K. market as well, as improved sales of the Adidas brand more than made up for dipping sales at Reebok.


Adidas Group Net Sales - Breakdown by Regions

(Million Euros, Quarter ended Sept. 30)




% Change

Western Europe




European Emerging Markets




North America




Greater China




Other Asian Markets




Latin America




The Adidas Group's turnover also inflated at double-digit rates in constant currencies in North America, strongly driven by the Sports Style unit of the Adidas brand, which saw its sales soaring by 58 percent in this region for the quarter. Latin America again delivered double-digit sales growth.

The group's expansion in China was not as buoyant as it had been in the first half, with sales up by 13.4 percent. However, Adidas managers dispelled fears of saturation spread by some Chinese rivals: The slowdown in quarterly expansion was partly explained by the fact that the Adidas Group just returned to growth in the country in the same quarter last year.

The weakest region was Other Asian Markets, which was affected by the impact of the Japanese disasters, but the group still lifted its sales there by 7.3 percent, both in constant currencies and in reported terms. Japanese sales slid by only 1 percent for the quarter, as a hike of 26 percent for Reebok nearly made up for a drop of 4 percent for the Adidas brand.

The Adidas brand alone enjoyed a sales increase of 10.7 percent to €2,523 million for the quarter. This amounts to a jump of 14.9 percent in constant currencies, buoyed by sales hikes of more than 20 percent in its running, basketball and Sport Style units, among others. The Neo label even lifted its sales by 40 percent and by the end of the quarter it was sold through about 1,000 stores in China, 60 in India and 26 in Russia.

Basketball was particularly robust in North America, where this category's sales were up by 21 percent for the quarter. For the current quarter, Adidas managers admitted that the brand was likely to suffer a decline in sales of licensed basketball apparel, due to the NBA lockout. Still, they were confident of a continuing rise in sales of basketball footwear, which makes up about 60 percent of the brand's turnover in this category.

When it comes to football, sales have been on the rise but Adidas expects more of an uptick in this category in the last quarter and in the run-up to the European football championships next year. Six teams wearing Adidas have already qualified. The brand is preparing for the launch of national jerseys, the championship ball and the Adizero F50 powered by Micoach, which it describes as the first football boot with a brain. The company confirmed its target to surpass record sales of €1.5 billion in the football category next year.

Demand for the Adidas brand has been stimulated in the last months by the comprehensive Adidas Is All In campaign, with a raft of adjusted clips for all sorts of categories and consumer groups, and personalities ranging from Lionel Messi to Katy Perry. The campaign spread rapidly on the internet, lifting the number of Facebook fans for all Adidas-related websites to more than 20 million, while more than 15 million people watched Adidas Is All In clips on YouTube.

Reebok's turnover dipped by 3.7 percent in euros to €564 million for the quarter but it inched up by 2.2 percent in constant currencies. While its global sales in the toning category were down by 20 percent for the quarter, this drop was mitigated by increased sales of the Zig Tech and Real Flex ranges, as well as an uptick in sales of Classics. Reebok was able to lift its average selling price in this category by 25 percent, compared with the same quarter last year.


Adidas Group Net Sales - Breakdown by Brands

(Million Euros, Quarter ended Sept. 30)




% Change









TaylorMade-adidas Golf








Reebok-CCM Hockey




Reebok's sales climbed by 4 percent in North America, where they increased by 24 percent excluding the toning category. The brand achieved a sales rise of 22 percent in European emerging markets, driven by Russia, and 7 percent in other Asian markets. Its turnover even inflated by 29 percent in China, albeit from a very low basis. On the other hand, Reebok was hit by delayed shipments in Brazil and its sales slipped in Europe, where it did not enjoy the same boost from the toning category as in the same quarter last year.

Yet it was TaylorMade-Adidas Golf (TMAG) that provided the most remarkable performance this quarter, with sales up by 10.3 percent in euros to €244 million, and by16.1 percent in constant currencies. It was buoyed by strong double-digit growth in sales of metalwoods and irons, and Adidas Golf footwear sales were up by nearly 40 percent in the quarter. Darren Clarke's victory at the British Open supported enthusiasm for TMAG.

The group's retail business was another driver of increased turnover for the quarter, with a sales rise of 20.6 percent in constant currencies, compared with 10.5 percent for wholesale sales. Again in constant currencies, comparable store sales jumped by 15 percent, with a hike of 13 percent for Reebok stores and 15 percent for Adidas stores.

The Adidas Group's gross margin declined slightly for the quarter, down by 0.3 percentage points to 47.1 percent. The Adidas brand was worst affected, as its gross margin dipped by 1.4 percentage points to 46.0 percent, while Reebok's gross margin crawled up by 0.7 percentage points to 37.5 percent. The wholesale unit saw its gross margin slide by 0.9 percentage points to 41.1 percent. Then again, extensive improvements in the operations of the group's retail unit, as described in our previous issue, yielded an increase of 1.5 percentage points in its gross margin to 63.2 percent for the quarter.

Sourcing costs were under pressure, shaving 3.2 percentage points off the group's gross margin for the quarter. However, the impact of this hike was mitigated by a more favorable regional mix and a higher share of sales through company-owned retail facilities. Adidas also implemented some price increases, cut costs and made cheaper products, with fewer add-ons. The group ended the three months with net profit of €303 million, up by 14.1 percent.

Adidas Consolidated Income Statement

(Million Euros, Quarter ended Sept. 30)





Net Sales




Gross profit




Gross margin (%)



-0.3 pp

Operating profit




Operating margin (%)



-0.5 pp

Pre-Tax Income




Net Income




Earnings/share (€, diluted)




The pattern for the quarter was not unlike the rest of the year so far. The Adidas Group's sales for the first nine months of the year shot up by 11.3 percent to €10,081 million, an increase of 14 percent in constant currencies. TMAG gained significant market share in the period, as its sales increased by 16.6 percent in constant currencies, compared with improvements of 14.5 percent for Adidas and 9.2 percent for Reebok.

The group's turnover in Western Europe climbed by 10.4 percent to €3,172 million, a rise of 9.8 percent in constant currencies for the nine months. European emerging markets lifted their sales by 15.1 percent to €1,189 million, amounting to an increase of 22.9 percent in constant currencies. It was driven by Russia, where the group's sales soared by 31 percent in constant currencies for the nine months. All other regions enjoyed double-digit sales growth in constant currencies, with the exception of other Asian markets.

For the same reasons as in the quarter, the Adidas Group managed to uphold its gross margin, which remained stable at 48.2 percent for the nine months. Its net profit for the period landed at €652 million, up by 16.4 percent compared with the same time last year.

The performance enabled Hainer to lift his forecast for the group's performance for the full year. He predicted that the company would end the year with a sales increase in the range of 12 percent in constant currencies, compared with an earlier forecast of 10 percent.

The change chiefly comes from the retail side, which appears to be expanding even faster than the manager's bullish expectations: Retail sales are set to rise at a high-teens rate for the year. The pickup in sales at TMAG was another motive to lift the group's forecast: The turnover of the Other business unit, which includes TMAG, is now predicted to end the year with a high-single-digit sales increase in constant currencies, instead of a mid- to high-single-digit sales rise.

The company further predicts that its gross margin will end the year between 47.5 percent and 48.0 percent, in the same range as the 47.8 percent reported last year. The group is confident that it will offset the increases in sourcing costs felt throughout the industry with a more judicious regional mix and a higher rate of retail sales.

Sales, marketing and other operating expenses are all due to decline as a percentage of sales. While the group has been investing in marketing for the Reebok brand, focusing on men's training and women's fitness, expenses were higher last year due to the football World Cup. Its net profit should expand faster than sales, in the range of 10 to 15 percent.