Adidas' shares rise after surprise guidance increase

Oct 21 — Adidas shares rose 2.4% in early trade on ​Wednesday, after the German sportswear group raised its full-year outlook on the back of unscheduled preliminary earnings which beat market expectations.

Including a ‌one-off US tariff refund of €200 million in the third quarter and a planned €100 million reinvestment in ⁠the fourth quarter, Adidas now expects ​annual operating profit of €2.5 billion, up ⁠from its previous target of €2.3 billion.

The company has been investing in rolling ‌out new styles ‌as the popularity of its Samba and Gazelle sneakers gradually fades, ⁠including the launch of its lightest‑ever racing ⁠shoe, the Adizero Adios Pro Evo 3, which helped Kenyan runner Sabastian Sawe crack the two‑hour marathon barrier in April.

Adidas had hoped to build on a strong World Cup showing to stay ahead of Nike and other rivals, but provided in July a post-World Cup revenue ‌outlook that disappointed the market.

"The footwear lifestyle business ​is currently challenging, mainly due to too much inventory and too much discounting in the marketplace, but we know this will soon normalise again," Adidas CEO Bjorn Gulden said in a statement on Tuesday.

When excluding the tariff refund, third-quarter operating profit came in 9% higher than expectations, J.P. Morgan analysts said. Including the refund, the earnings rose 37% to €1.01 ​billion ($1.13 billion), beating analyst expectations for €742 million in a consensus provided by the ‌company.

The surprise update provided "another ‌compelling ⁠proof point of Adidas continuing to expand market share while delivering profitable growth amid a challenging environment", Metzler analysts said in a note to investors.

However, the higher forecast mostly reflects the one-off US tariff refund rather than stronger ‌underlying trading and may have ​limited impact on market expectations, Metzler analyst ‌Felix Dennl said.

($1 = 0.8912 ⁠euros)

(Reporting by ​Tristan Veyet in Gdansk and Alessandro Parodi in Paris, editing by Milla Nissi-Prussak and ​Louise Heavens)

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