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Adidas powers to forecast-beating profits

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Adidas powers to forecast-beating profits

Adidas powers to forecast-beating profits

Adidas earnings outpaced forecasts in the first quarter thanks to ecommerce and a strong performance in North America.

Julian Satterthwaite reports.


Adidas powers to forecast-beating profits

Adidas earnings raced higher in the first three months of the year.

Net profit up almost a fifth.

Profit margins outpacing deadly rival Nike.

All that despite a decline in sales in its European home market.

Reuters correspondent Emma Thomasson in Berlin explains: SOUNDBITE (English) REUTERS CORRESPONDENT, EMMA THOMASSON, SAYING: "It's put a big focus particularly on North America and expanding in ecommerce, and ecommerce sales are generally more profitable than the wholesale business that Adidas has generally been strongest in." Chief Executive Kasper Rorsted predicts sales growth will pick up again in the second half.

Adidas has benefited from higher demand for its top-priced products.

Reduced marketing costs and favourable currency moves two more pluses.

But growth has brought headaches too.

North American sales hampered by supply-chain bottlenecks: SOUNDBITE (English) REUTERS CORRESPONDENT, EMMA THOMASSON, SAYING: "Today the CEO told us that they're making lots of efforts to solve those problems, including increasing air freight, so they're sending garments from Asia, where they're manufactured, to the North American market.

But also ramping up supplies in factories and so on." A sales decline in Europe down to fickle fashion.

The company's Stan Smith trainers no longer quite so in demand.

Rorsted has targeted proper sports gear to turn sales around.

Now smaller rivals might worry him more than Nike.

Sales are booming at Puma and Under Armour.

Adidas can't afford to stand still.

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