Adidas gets World Cup boost in ‘very volatile’ market

A cyclist rides past the Adidas Arena, April 18, 2024, in Paris, France. (AP Photo/Thomas Padilla, File)

April 29 - Adidas on Wednesday reported stronger than expected first-quarter operating profit and sales, helped by early demand for World Cup soccer products ahead of the FIFA tournament in June.

Adidas said it frontloaded World Cup products to its markets to avoid “many supply and transportation issues.”

“It was definitely the right decision to bring in the inventory early, especially for the World Cup,” Chief Financial Officer Harm Ohlmeyer told reporters on a call. “Without that, we would not have been able to grow 14 per cent in the first quarter.”

Running gear was also a growth driver with sales rising more than 10 per cent. The Adidas brand is riding high after its ultra-light racing shoes helped Kenyan athlete Sabastian Sawe become the first person to run a sub-two-hour marathon in an official race in the London Marathon on Sunday.

Adidas’ shares were up 7 per cent at 09:56 GMT on the robust performance. The shares have fallen over the past year as the company faced U.S. tariffs and cautious consumers, and are still near their lowest level in more than three years.

Adidas said “discipline” in not selling too much to retailers was crucial to avoid sneakers having to be discounted in a “very volatile” retail environment.

CEO Bjorn Gulden flagged Europe as the market with the highest levels of discounting and a lot of uncertainty among consumers.

U.S. rival Nike said earlier this month it was being “aggressive” with promotions as it tries to clear unsold stock.

Quarterly sales rose to 6.6 billion euros (US$7.7 billion), even though several countries in the Middle East reported sales declines due to the Iran war.

“Stores in many of these markets (have) been impacted when war activities are going on. And of course, if you have bomb alarms in a market, that means that the authorities tell you not to open your stores,” Gulden told journalists, adding the situation was changing from day to day.

Emerging markets, which includes the Middle East, represented 13 per cent of sales in the first quarter.

Quarterly operating profit rose by 16 per cent to 705 million euros, well above the 647 million euros projected by analysts in a company-compiled poll.

Adidas footwear grew just 4 per cent in currency-adjusted terms as sales of the Samba and Gazelle shoes slowed compared to last year, while apparel sales jumped 31 per cent, boosted by local designs like the Chinese New Year track jackets.

Reporting by Linda Pasquini in Gdansk and by Helen Reid in London, editing by Ludwig Burger, Thomas Seythal, Shri Navaratnam and Jane Merriman