Adidas confirms record forecast for 2019

German sportswear manufacturer Adidas confirmed on Wednesday its forecast for the "record year" of 2019 despite a decline of the operating margin as well as lower net income in the third quarter (Q3).

According to Adidas, revenues adjusted for currency effects increased by 6 percent driven by increased sales in the company's training, running and outdoor products. Revenues grew by 9 percent to 6.41 billion euros (7.11 billion U.S. dollars) in the third quarter (Q3) and by 0.5 billion euros year-on-year.

"I am very pleased with our third quarter results and the continued progress made in our strategic growth areas, delivering double-digit sales increases at Adidas North America as well as in Greater China and e-commerce," Chief Executive Officer (CEO) Kasper Rorsted said.

The combined sales of Adidas and subsidiary Reebok grew at low double-digit rates in emerging markets, Russia and north America. Currency-neutral sales of Reebok alone were only two percent up.

According to Adidas, the Germany-based company would be "on track for another record year" following already strong financial results in 2018. CEO Rorsted stated that the 2019 results would be another "important milestone toward achieving our 2020 targets ... despite some challenges."

The world's second largest sportswear company announced a decline of the operating margin by 1.3 percentage points to 14 percent caused by increased air freight costs and a "less favorable pricing mix." However, the underlying decline in the gross margin was "less pronounced than expected.

At the same time, Adidas registered a decline in the net income from continuing operations by around 2 percent to 644 million euros in Q3 caused by a "negative impact" from the adoption of IFRS 16 (International Financial Reporting Standard).

During Q3, the company used cash generated from its operating activities to repurchase 1.2 million shares of Adidas AG worth 328 million euros as well as to pay shareholder dividends. As a result, net cash reserves decreased by 194 million euros year-on-year.

Following the announcement of the Q3 figures on Wednesday, the shares of Adidas sharply declined by nearly 3 percent and were among the biggest losers in the German DAX index.