Adidas shares jump on buyback, profit optimism

Shares of German sportswear firm Adidas soared after it announced a large buyback, gave an upbeat outlook for 2018 and lifted its 2020 profitability forecast.

Published: 14th March 2018 04:48 PM  |   Last Updated: 14th March 2018 04:48 PM   |  A+A-

An Adidas logo is seen at the new Futurecraft shoe unveiling event in New York | Reuters

By Reuters

HERZOGENAURACH: Shares of German sportswear firm Adidas soared on Wednesday after it announced a large buyback, gave an upbeat outlook for 2018 and lifted its 2020 profitability forecast, helped by rapid growth of ecommerce.

Adidas, which has seen its shares fall 15 percent in the past six months as sales growth cooled, said late on Tuesday it plans to buy back up to 3 billion euros ($3.7 billion) worth of its shares by 2021, or almost 9 percent of its share capital.

The company's shares were up 8.7 percent at 0910 GMT, the biggest gainer on the German blue-chip index.

"Adidas is transforming from a top-line (revenue) story to a margins story," said Morgan Stanley analysts, who rate the stock "equal-weight".

"While the slowdown in organic growth is going to raise some questions today, confidence on the profitability progression implies a continued superior growth potential."

After a tough few years, Adidas has returned to form under Chief Executive Kasper Rorsted, taking market share from bigger rival Nike in North America and selling its underperforming TaylorMade golf and CCM Hockey brands.

Since taking over in 2016, Rorsted has put a bigger focus on improving profitability, which still lags Nike.

Adidas and Nike have both been benefiting from a big rise in sales of shoes online, which boosts profitability. Adidas said ecommerce sales rose 57 percent in 2017.

Adidas forecast currency-neutral sales would rise around 10 percent in 2018, with an operating margin of between 10.3 and 10.5 percent, up from 9.8 percent in 2017. Nike reported an operating margin of 13.8 percent for its 2016/17 fiscal year.

Adidas lifted its forecast for the operating margin to hit 11.5 percent by 2020, up from a previous target for 11 percent.

Adidas said fourth-quarter sales rose 12 percent to 5.06 billion euros, a currency-neutral rise of 19 percent, but missing analyst forecasts for 5.13 billion as sales in Russia and at its Reebok brand slipped.

Fourth-quarter operating profit more than tripled to 132 million euros, beating analyst forecasts for 61 million, but the company recorded a net loss of 41 million euros after a tax impact of 76 million due to changes in the U.S. tax code.

The buyback comes on top of a proposed dividend of 2.60 euros per share, above average analyst forecasts for 2.53 euros.

Stay up to date on all the latest Business news with The New Indian Express App. Download now
(Get the news that matters from New Indian Express on WhatsApp. Click this link and hit 'Click to Subscribe'. Follow the instructions after that.)


Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on are those of the comment writers alone. They do not represent the views or opinions of or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp