Adidas share price soars as sportswear giant toasts Manchester United and Kanye West after smashing earnings expectations

 
Joe Hall
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Adidas' expensive deal with Manchester United appears to be paying off (Source: Manchester United)

Adidas' share price rose over eight per cent in morning trading after smashing analysts' expectations for its earnings in the third quarter.

The figures

Sales at the German sportswear giant accelerated by 17.7 per cent from €4bn (£2.9bn) to €4.8bn, beating analysts' expectations of €4.5bn, while profit jumped 20.1 per cent to €2.3bn.

Net earnings grew 20 per cent to €337m - again trumping analysts who had forecast a figure closer to €300m.

The two biggest growth regions were in North America and Greater China where net sales rose 25.5 per cent to €776m and 35.4 per cent to €691m respectively.

Shares in the company had jumped nearly nine per cent to €89.35 per share by lunchtime, after closing at €82.12 on Thursday.

Read more: Even at £750m, Adidas' United kit deal is a bargain

Why it's interesting

Read more: Nike beats Adidas in sports firm valuation rankings

Adidas' marketing and sponsorship investments in the US are helping it make up ground on market leaders Nike and Under Armour.

The company has tied up a number of sponsorships with leading American sports stars from the NBA and NFL as well as pop stars such as Kanye West and Pharrell Williams.

Yet the headline-grabbing sponsorships have also been combined with grassroots campaigns - its latest being an offer to help high schools drop potentially insensitive North American mascots by providing free design resources.

On top of net sales €619m, Adidas recorded gross profit of 32 per cent in the region despite a 33 per cent increase in operating expenses - largely made up of marketing costs - to €531m.

The launch of a new Manchester United kit helped overall football revenues increase at a double-digit rate and boosted the sector's success in the US.

What Adidas said

Teaming up with Manchester United has yielded unprecedented success so far with both a record-breaking first day and first week launch.

We have made major inroads over the last couple of months to establish platforms to connect with the US consumer...through our highly impactful partnerships with Kanye West and Pharrell Williams we are making sure the consumer understands that Adidas can make them look cool on and off the pitch.

- Chief executive Herbert Hainer

In short

After falling behind both Nike and Under Armour in sportswear battle for North America, Adidas is back off the ropes in the region and enjoying the benefits.

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