Adidas pins hopes on World Cup as it loses out to rival

Adidas, which has opened a flagship store in Yorkshire, said third quarter operating profit dropped 6 per cent while sales fell 7 per cent, hit by distribution problems in Russia, currency effects and poor sales of golfing products.

Last year, results were boosted by the Olympics and the European football championships. But Adidas has struggled to maintain momentum, warning on sales and profit in September. Adding to its woes, Nike has outperformed on its home turf.

Nike reported an 8 per cent rise in sales in western Europe in its first fiscal quarter to the end of August, compared with a fall of 6 per cent for Adidas at constant currencies in its third quarter.

Adidas chief executive Herbert Hainer said next year’s World Cup and positive feedback for its upcoming collections meant growth would return.

The leader in the $5bn football market traditionally performs well in years with major sporting events and has forecast record football sales of more than $2.7bn in 2014.

“We have dealt swiftly and decisively with our challenges in the third quarter, to ensure we return to growth,” Mr Hainer said.

“Momentum will clearly return to our business in the fourth quarter and beyond.”

Despite the fall in sales and operating profit, the group managed to improve its gross profit margin – a key measure of profitability in the apparel industry – 1.9 percentage points to 49.3 per cent in the quarter as it pushed through higher prices and made more sales in its own shops, including its major new store at Trinity Leeds shopping centre.

With the World Cup and more new products to come, analysts believe the worst is over after the third quarter.

“All the bad news (is) on the table now,” DZ Bank analyst Herbert Sturm wrote in a note. “From now on we expect a series of positive news flow in the next months to come.”