Adidas group revenues grew 17% in Q1

In the first quarter of 2012, adidas revenues increased

14%on a currency-neutral basis as a result of double-digit sales increases in wholesale, retail and other businesses. Group revenues grew 17% to EUR 3.824 billion (US$ 5.031 billion or Rs 26,824 crores) in the first quarter of 2012 from EUR 3.273 billion (US$4.306 billion or Rs 22,959 crores) in 2011.

Group sales increase was driven by double-digit sales growth in all segments. In the first quarter currency-neutral wholesale revenues increased 10% due to double-digit sales growth at adidas. Currency-neutral retail sales increased 16% versus the prior year, driven by 9% comparable store sales growth. Revenues in other businesses were up 32%.

Currency translation effects had a positive impact on segmental sales in euro terms. Wholesale revenues increased 13% to € 2.614 billion (US$ 3.439 billion or Rs 18,336 crores) from € 2.320 billion (US$3.052 billion or Rs 16,272 crores) in 2011. Retail sales rose 20% to € 693 million (US$ 911 million or Rs 4,857 crores) versus € 577 million (US$ 759 million or Rs 4,046 crores) in the prior year. Sales in other businesses grew 37% to € 517 million (US$ 680 million or Rs 3,625 crores) in 2011 they were € 376 million (US$494.7 million or Rs 2,637 crores).

In the first quarter of 2012, currency-neutral adidas group sales grew in all regions. Revenues in Western Europe increased 7%. In European emerging markets, group sales increased 15%. Sales for the adidas group in North America grew 11% due to strong increases in the USA. Sales in Greater China increased 26%. In other Asian markets they grew 26%, driven by strong double-digit increases in Japan and South Korea. In Latin America, sales grew 14%. In most regions, currency translation effects had a positive impact on sales in euro terms.

The gross margin of the adidas group decreased 0.7 percentage points to 47.7% in the first quarter of 2012. Last year it was 48.5% for the same period. Gross profit for the adidas group grew 15% to € 1.826 billion (US$2.402 billion or Rs 12,807 crores) versus € 1.587 billion (US$2.088 billion or Rs11,133 crores) in the prior year. Group operating profit increased 30% to € 409 million (US$538 million or 2,868 crores) in the first quarter of 2012 versus € 313 million (US$411.8 million or Rs 2,195 crores) in 2011. As a percentage of sales, the operating margin of the adidas group was up 1.1 percentage points to 10.7%. Last year it was 9.6% for the same period. Other operating expenses as a percentage of sales decreased 1.6 percentage points to 38.4% from 40% in 2011. Financial income increased 78% to € 8 million (US$ 10.5 million or Rs 559 crores) in the first quarter of 2012 from € 5 million (US$ 6.5 million or Rs 346.5 crores) in the prior year, mainly due to an increase in interest income. Financial expenses decreased 16% to € 28 million (US$36.8 million or Rs 196 crores) in the first quarter of 2012. In 2011 they were € 33 million (US$43 million or Rs 229 crores). The decrease in negative exchange rate effects contributed to the decline.

Income before taxes (IBT) for the adidas group increased 36% to € 389 million (US$ 511.8 million or Rs 2,728 crores) from € 285 million (US$ 375 million or Rs 1,999 crores) in 2011. In the first quarter of 2012, basic and diluted earnings per share amounted to € 1.38 (US$ 1.81 or Rs 96.5), representing an increase of 38%. In 2011 they were € 1.00 (US$ 1.3 or Rs 69). Group inventories increased 17% to € 2.375 billion (US$ 3.125 billion or Rs 16,662 crores) at the end of March 2012 versus € 2.033 billion (US$ 2.675 billion or Rs 14,262 crores) in 2011.

At the end of March 2012, group receivables increased 10% to € 2.366 billion (US$ 3.113 billion or Rs 16,598 crores) as a result of the group sales growth. In 2011 group receivables were € 2.155 billion (US$ 2.835 billion or Rs 15,115 crores). On a currency-neutral basis, receivables were up 8%. This growth is lower than the 13% currency-neutral wholesale-related sales increase in the first quarter of 2012 and mirrors strict discipline in the group’s trade terms management and concerted collection efforts.