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Adidas outlook disappoints in Olympic year

Different shoes and soccer ball by German sporting goods maker are pictured before annual news conference in Herzogenaurach
Different shoes and soccer ball by German sporting goods maker are pictured before annual news conference in Herzogenaurach

By Victoria Bryan

FRANKFURT (Reuters) - German sportswear group Adidas stuck to forecasts for a slowdown in sales growth in 2012, disappointing investors who had hoped for more in a banner year for sports events with the Olympics and European soccer championships.

The company said on Wednesday sales growth would slow to 5-9 percent on a currency-neutral basis from the 13 percent reported for 2011. Analysts described this as a cautious move from a company that upgraded forecasts four times in 2011.

Smaller German rival Puma , controlled by French luxury goods group PPR , said last month it expected a near 10 percent rise in group sales for 2012, while Nike in December said future orders were up 13 percent.

"2012 guidance is seen as a little low - it is below Puma guidance and below Nike order backlogs," Silvia Quandt analyst Mark Josefson said.

Adidas, the world's second-largest sporting goods group behind Nike , grew sales and earnings to record levels in 2011, as consumers in China and Eastern Europe flocked to buy its three-stripe products.

Adidas shares, which touched record highs of above 60 euros in February, were down 2.1 percent at 56.51 euros by 1245 GMT, bucking the positive trend on Germany's Dax index of leading shares <.GDAXI>.

The three big sports brands have enjoyed strong growth over the last year, as fashion-conscious Chinese and Russian consumers snap up big brands and running fans stock up on the latest high-tech products in the United States.

EUROPEAN SOCCER AND OLYMPICS

In 2012, the big sportswear brands are courting soccer fans ahead of the UEFA European championships in Poland and Ukraine that starts in June.

Adidas is an official sponsor of the tournament and also supplies kit to European and world champions Spain as well as Germany, another of the tournament favorites.

It has previously said it expects record soccer sales of over 1.5 billion euros ($1.97 billion). Rival Puma is stepping up investments, signing deals with players such as Barcelona's Cesc Fabregas, and the Italian soccer federation.

Analyst Chris Walker of Nomura said that Adidas's gross margins were slightly lower in the fourth quarter and noted that the stock had enjoyed a strong run.

"It's probably more that expectations were elevated," he said of the share price reaction.

"The full year results were in line with expectations and broadly in line with company guidance," added Walker, who rates the stock a "buy."

"It's an exciting year for the company. They will probably have to weight more of their marketing spend to the early quarters to get maximum benefit," he added.

Adidas is a sponsor of the London Olympics and is supplying kit to the host nation, Team GB.

Adidas, which also owns the Reebok brand, confirmed a forecast for earnings per share to rise by between 10 and 15 percent to around 3.52-3.68 euros in 2012, equivalent to net income of 736-770 million euros.

The group reported 2011 sales of 13.3 billion euros and operating profit of 1.01 billion, in line with expectations in a Reuters poll.

Adidas itself had predicted a near 12 percent rise in sales in November, the fourth time it had increased its sales outlook for 2011.

($1 = 0.7625 euros)

(Additional reporting by Keith Weir in London; Editing by Jodie Ginsberg, Jane Merriman and Mark Potter)

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