Adidas'S 2018 Earnings Report: Reebok'S Turnaround In Profitability, Slowing Growth In Greater China

In March 13th, Adidas released its fourth quarter 2018 report and its annual earnings report.

The results showed that Adidas's fourth quarter revenue grew 3.5% to 5 billion 234 million euros compared with the same period, the annual revenue grew 3.3% to 21 billion 915 million euros, the net profit of the continuing business increased 26.2% to 1 billion 709 million euros, and the net profit attributable to ordinary shareholders increased 55.1% to 1 billion 702 million euros.

From the perspective of market segmentation, Adidas's revenue growth in 2018 was mainly due to the business in North America and the Asia Pacific region.

North American market revenue grew by 10.4% over the same period last year, while the Asia Pacific market grew by 11% over the same period last year, while Europe, Russia and CIS countries and Latin America all showed varying degrees of decline in performance.

The reason is that a large number of stores were closed during the world cup, and European sales continued to slump.

In addition, Adidas's brand Reebok achieved profitability by over 150 million.

At the earnings conference, Adidas CEO Kasper Rorsted said, "Adidas's strategic growth momentum comes from North America, Greater China and e-commerce. These three items have achieved two digit growth in the past year. The past year has been the best year in the company's history."

But at the same time, Adidas also said that due to the shortage of medium price clothing supply chain, this will affect the performance growth in 2019, and Adidas is afraid that it will be difficult to achieve this demand.

The news triggered a 5.5% drop in Adidas's share price.

Adidas expects sales to maintain 5-8% growth in 2019, but it will be affected by supply chain in the first half. The growth rate is expected to remain at 3-4%, and then supply chain management will be strengthened in the second half of the year.

To this end, in February 2019, Adidas appointed Martin Shankland (Martin Shankland) as the global business leader, mainly responsible for supply chain management.

Foreign media said that the last business director Jill Stellat (Gil Steyaert) resigned from the post in only a year or had problems with the supply chain.

Due to the 2018 World Cup, Adidas increased its marketing cost budget, and its marketing expenses reached 3 billion 10 million euros, an increase of 10% compared with the same period last year.

Thanks to good product pricing and channel investment, Adidas's gross margin increased by 1.4 percentage points to 51.8%, which greatly offset the negative impact caused by exchange rate changes.

In the past year, Adidas has attached particular importance to the electricity supplier business. In the fourth quarter of 2018, the electricity business growth rate reached 36%. "We launched official applications last year, downloaded more than 7 million times in 25 countries, and the electricity supplier has huge room for growth," CEO Rorsted said.