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Adidas Delivers Comeback Performance in 2015

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Adidas AG announced fourth quarter and fiscal year 2015 financial results today.

In the fourth quarter, the Herzogenaurach, Germany-based athletic apparel and footwear giant grew sales by 15.4% (12 percent on a currency neutral basis) to 4.17 billion euros ($4.45 billion) driven by accelerated momentum at Adidas and Reebok.

Adidas revenues grew by 16 percent, with continued double-digit increases in most market, including Greater China.

Western Europe was the biggest and fastest-growing region for the company. Sales grew 32.8% to over a billion euros, or almost a quarter of the business.

North America was the second largest region in terms of sales, with 744 million euros, a 22.2% increase. According to the company, American retailers have been granting Adidas increased shelf space in response to consumer demand and greater respect for the brand.

Although the Yeezy shoe co-designed by Kanye West has gotten tremendous press in recent months, it seems that other celebs, like pop star Pharrell Williams and Celine creative director Phoebe Philo, have perhaps been helping the cause even more. Williams helped the company release its Seventies-era Superstar basketball shoe in more than 50 color-saturated solid shades like semi-solar pink, blaze green and bold blue. Philo wore the green-striped white Stan Smiths for her appearance at the end of one of her recent runway shows. In the latest quarter, sources report that the Adidas Originals line, including the Stan Smith and the Superstar, grew by 46 percent.

In the fourth quarter, gross margin expanded by 230 basis points to 47.2%. Operating income declined by 36.1% to 22 million euros. The net loss of 139 million euros in the fourth quarter of 2014 narrowed to a loss of only 44 million euros in the most recent period.

For the fiscal year, group sales increased 16 percent on a reported basis ( 10 percent on a currency-neutral basis) to 16.915 billion euros ($18 billion), with Adidas revenues up by 12 percent, helped by double-digit growth in Western Europe, Greater China, Latin America and, the Mideast and Africa. Adidas sales grew by double-digit rates in the U.K., Italy, France and Spain. North American sales of the brand rose by 5 percent. Sales in Russia fell. Revenues at TaylorMade-Adidas Golf decreased 13 percent due to sales declines in virtually all markets.

For the full year, gross margin up by 60 basis points to 48.3%. driven by a more favorable pricing, channel and product mix at Adidas and Reebok.

A planned increase in marketing spend in the year drove up SG&A as a percent of sales in the year.

In 2015, net income attributable to shareholders grew by 29 percent to 634 million euros from 490 million euros in the prior year. Excluding goodwill impairment losses, net income rose by 18 percent to 668 million euros.

The company expects sales to increase between 10 and 13 percent on a currency neutral basis in the current fiscal year, and net income to increase to approximately 800 million euros.

“2015 was a very successful year for the Adidas Group. We reached all of our major financial goals and exceeded our initial top- and bottom-line targets,” commented Herbert Hainer, Adidas Group CEO. “Our 2015 performance is a picture-perfect example of a successful comeback in sport. As a Group, today we are stronger and in better shape than ever before.”

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