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Investment Guru India 2018-08-09 14:01:17

By Emma Thomasson

BERLIN  - German sportswear firm Adidas reported higher-than-expected second-quarter results on Thursday, as it kept growing faster than rival Nike in North America even as it stagnates in its western European home market.

Shares in the company famous for its three-stripe brand jumped 10 percent to a four-month high, putting them among the top performers on the STOXX 600 index and on track for their best day since the group increased its outlook in March.

The results are the latest endorsement of a strategy implemented by Chief Executive Kasper Rorsted since taking over in 2016, focused on improving profitability as well as expanding in North America and China and pushing sales via ecommerce.

Sales rose 10 percent to 5.26 billion euros ($6 billion) after currency effects, beating the 8 percent expected by analysts, while attributable net profit of 396 million was also ahead of average forecasts for 386 million.

Some analysts had predicted that higher marketing spending in the quarter due to the soccer World Cup would dent the bottom line, but Adidas counteracted that effect with higher prices and sales through more profitable channels such as ecommerce.

Adidas saw sales growth in North America slow slightly to 16 percent, but that was still well ahead of the 3 percent growth Nike reported for its March to May fiscal fourth quarter, the firm's first increase in the region for a year.

In greater China, Adidas sales growth accelerated to 27 percent, slightly ahead of Nike's 25 percent

As Adidas had previously cautioned, sales were flat in western Europe, where Nike has been growing faster, but they jumped 14 percent in Russia, which hosted the World Cup.

Nike teams dominated the final rounds of the World Cup, but Rorsted told journalists the tournament was still a success as it sold more than 8 million shirts despite the early departure of its teams including Germany and Spain.

Adidas said it was taking a medium triple-digit million euro impairment related to the Reebok trademark in 2016 after the German Financial Reporting Enforcement Panel disagreed with how it calculated historical book value.

But it said the restatement had no impact on its cash position and reiterated its guidance for 2018 and beyond, adding that Reebok's prospects were unchanged, even as the brand reported a 3 percent fall in second-quarter sales.

Adidas bought the Reebok brand in 2005, but it has performed poorly since. Rorsted announced plans in 2016 to overhaul Reebok and said on Thursday it was on track to return to profitability by 2020.

($1 = 0.8616 euros)

(Reporting by Emma Thomasson; editing by Douglas Busvine and Jason Neely)