DGAP-Adhoc: adidas AG: adidas AG updates financial outlook following recent developments in Russia/CIS and continued weakness in the golf market, and announces strategic measures to secure and drive growth

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| Source: EQS Group AG
adidas AG  / Key word(s): Forecast

31.07.2014 08:45

Dissemination of an Ad hoc announcement according to § 15 WpHG, transmitted
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The issuer is solely responsible for the content of this announcement.

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FOR IMMEDIATE RELEASE        July 31, 2014

AD-HOC: adidas AG updates financial outlook following recent developments
in Russia/CIS and continued weakness in the golf market, and announces
strategic measures to secure and drive growth

Herzogenaurach - Following a meeting of the Executive Board of adidas AG,
the Board announced important strategic decisions that have been taken to
secure and drive growth and profitability as well as addressing recent
developments. As these decisions will impact the Group's financial results,
Management is also updating its financial outlook. Management now expects a
mid- to high-single-digit currency-neutral sales increase for the full year
2014 and net income attributable to shareholders to be at a level of around
EUR 650 million. In addition, Management postpones the delivery of its
Route 2015 targets.

For the second quarter, the Group's top-line momentum materially improved
as expected. Sales increased 10% on a currency-neutral basis, driven by 14%
growth at adidas and 9% growth at Reebok, while sales at TaylorMade-adidas
Golf declined 18%. Currency effects continued to play a significantly
negative role, impacting top-line results by over 7 percentage points in
the quarter. As a result, sales in euro terms increased 2% to EUR 3.465
billion. Operating profit in the second quarter was EUR 220 million. Net
income attributable to shareholders for the quarter was EUR 144 million.
Currency translation, less favourable hedging rates, higher marketing spend
for the 2014 FIFA World Cup(TM) as well as a significantly lower
contribution from TaylorMade-adidas Golf offset the otherwise strong
underlying growth from adidas and Reebok in most major categories and
markets.

Taking into account the strong top-line improvements at brand adidas and
Reebok as well as recent developments in Russia/CIS and in the golf market,
the following strategic decisions have been taken, which will impact the
Group's financial development in the second half of 2014 and in 2015:

  - Firstly, poor retail sentiment and the slow liquidation of old
    inventory in the golf category across the globe will lead to a
    significantly more challenging top-line and margin development for
    TaylorMade-adidas Golf than originally expected in the second half of
    2014. To ensure the successful execution of our strategy to drive
    long-term margin improvements in the golf category, we will take
    further measures to reduce inventory in the marketplace in the second
    half of 2014. In addition, we will also begin a restructuring programme
    at TaylorMade-adidas Golf to align the organisation's overhead to match
    lower expectations for the golf industry's development.

  - Secondly, the recent trend change in the Russian rouble as well as
    increasing risks to consumer sentiment and consumer spending from
    current tensions in the region point to higher risks to the short-term
    profitability contribution from Russia/CIS. As a result, Management has
    decided to significantly reduce its store opening plan in the market
    for 2014 and 2015, and to further increase the number of store
    closures. These steps are aimed to reduce risk and protect profit as
    well as to drive a faster implementation of new inventory management
    principles for that market. Nevertheless, Management remains very
    encouraged by increasing brand momentum for both adidas and Reebok as a
    result of local marketing investments as well as improving store
    operations.

  - Thirdly, following the strong performance at the 2014 FIFA World
    Cup(TM), and improving momentum at brand adidas and Reebok, Management
    has decided to step up marketing and point-of-sale investments over the
    next 18 months to secure and drive faster growth rates and market share
    gains, particularly in the developed markets such as North America and
    Western Europe. This is underpinned by a strong product pipeline in key
    performance categories as we further leverage our award-winning
    Boost(TM) technology as well as new product and collaboration
    initiatives in lifestyle.

  - Finally, to drive faster decision making and more effective and
    efficient consumer-focused strategies and execution in the marketplace,
    Management has completed an in-depth review of the Global Brands and
    Global Sales structures under the direction of recently appointed
    Executive Board members Eric Liedtke and Roland Auschel. This new
    organisational structure will take effect on August 1, 2014.

Taking these developments and initiatives into account, Management now
expects a mid- to high-single-digit currency-neutral sales increase
(previously: high-single-digit increase) for the full year 2014 and net
income attributable to shareholders to be at a level of around EUR 650
million (previously: EUR 830 million to EUR 930 million). In addition,
given that there has been little relief in the currency markets, the
significantly lower contribution projected from TaylorMade-adidas Golf as
well as higher investments in marketing, the Group's Route 2015 targets are
no longer achievable in the timeframe. This will be discussed in further
detail as part of the adidas Group's half year financial results on August
7, 2014.

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Contacts:
Media Relations      Investor Relations
Jan Runau       John-Paul O'Meara
Chief Corporate Communication Officer   Vice President Investor Relations
Tel.: +49 (0) 9132 84-3830     Tel.: +49 (0) 9132 84-2751

Katja Schreiber      Christian Stoehr
Director Corporate Communication    Senior Investor Relations Manager
Tel.: +49 (0) 9132 84-3810     Tel.: +49 (0) 9132 84-4989

Lars Mangels
Corporate Communication Manager
Tel.: +49 (0) 9132 84-2680

Please visit our corporate website: www.adidas-Group.com 


31.07.2014 The DGAP Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de

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Language:     English
Company:      adidas AG
              Adi-Dassler-Straße 1
              91074 Herzogenaurach
              Germany
Phone:        +49 9132 84 0
Fax:          +49 9132 84 2241
E-mail:       
Internet:     www.adidas-group.com
ISIN:         DE000A1EWWW0, US00687A1079, US00687P1049
WKN:          A1EWWW, A0MNCC  , 909676 
Listed:       Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr
              in Berlin, Düsseldorf, Hamburg, Hannover, München, Stuttgart
 
End of Announcement                             DGAP News-Service
 
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