Adidas remains optimistic, despite Achilles heel Reebok

Loss in fourth quarter, profits on the horizon

Despite creating a net loss of 227 million euro in the
fourth quarter of 2012, mainly caused by Reebok,
the German sporting giant expects the operational margin
to rise to nine percent, compared to eight percent the year before.

Adidas, the number two in sporting goods
worldwide, is predicting a net profit between 890 and 920 million euro in 2013.
If so, the dividend will be raised from 1 to 1.35 euro per share. Very good
news, according to DZ-analyst Herbert Sturm.

China, higher prices and sales in retail

Notwithstanding the negative results, the gross
margin rose from 45.6 percent to 47.6 percent in the fourth quarter, due to higher prices and higher sales in retail. Sales rose by four percent to 3.37
billion euro, still below the average of 3.44 billion euro analysts had expected.

Adidas announced that the growth in 2012 was
mainly due to double-digit earnings growth in China and record sales of 1.7 billion
euro in the football sector. The golf department also performed admirably and
has already reached the profit target of 2015, with sales reaching 1.3 billion
euro and still rising.

Problematic Reebok

Adidas explained the bad results by pointing to
the review of growth predictions of Reebok, especially in America, and the discounts
used because of the economic crisis in Europe.

Reebok has been the Achilles heel of Adidas
since its purchase in 2006. Sales have been constantly dropping and economic
irregularities at Reebok in India have also caused wholesale numbers to drop
in 2012. Jurgen Kolb, analyst at CA Chauvreux, however recently wrote that the
brand finally has a healthy basis again.

Continued support

Adidas CEO Herbert Hainer said at a press
conference that the company will continue to strive towards making Reebok a successful
brand. New collections of sports shoes and clothing, including a collection
inspired by the CrossFit Community and a cooperation with yoga instructor Tara
Stiles, should help to reach that goal.

Hainer also said Adidas is not planning any new
acquisitions until Reebok has been successfully launched.  The company first and foremost wants to give
shareholders value for their money.

Share rises

At the opening of the exchange in Frankfurt it
became clear that the announcement of the quarterly loss and the lowering of
sales expectations for 2013 have no impact on the share of Adidas. That share
rose by 4.8 percent, the biggest rise it has seen in the last ten months.

At the moment the share is worth eleven percent
more than at the start of this year. With the expansion of its retail
department, Adidas has the perfect tool for neutralising disappointing results
of Reebok.