Adidas Could Outrun the Recession
Nobody is immune from the global downturn, but Adidas seems to be coming out fighting.
Plenty of monolithic institutions have already become roadkill of the recession – names that have been with us all our lives, like Woolworths, have gone. Their downfall shows that the economy takes no prisoners. But sports giant Adidas has been at the top of its game for decades. And the allure of the Adidas brand seems set to continue on its all-conquering trajectory. Adidas trainers and Adidas clothing lines tap into a particular aspirational lifestyle; Adidas is essentially sporty, competitive, a player.
When it comes to the Adidas brand, it is instantly recognisable – a shorthand to quality sportswear. And the Adidas logo has been claimed and reinvented by every new generation. Adidas seems to find a way into the lives of every school-age boy as well as their fashionable dads; from wearing the Adidas logo on school bags to wearing Adidas footwear on the football pitch. Adidas has endured. So it shouldn't be surprising that amid the global gloom around the global recession, Adidas is kicking back. According to recent reports, the fourth quarter net profit for Adidas in 2008 jumped 151% on improved sales, a better tax rate and higher operating profits.
Adidas: A Sporting Chance
The German-based Adidas is the second largest selling sportswear company (after Nike). And Adidas said their fourth quarter net profit jumped from 21 million Euro in the same period the previous year, to 54 million Euro. But Adidas are not taking this 151% on improved sales for granted. Despite the fact that the success of the fourth quarter contributed to a 16% increase in net profit overall in 2008, Adidas are still being conservative about their future. Overall, Adidas sales rose by 5% in 2008 to 10.8 billion Euro from 10.3 billion Euro the year before. But Adidas have said they predict a small decline in 2009. Although sales won't necessarily drop as Adidas remains a sought after brand, the higher cost of raw materials, labour costs and volatile foreign exchange markets are expected to hit Adidas. The price of Adidas shares is down having lost 45% of their value in the last year. – even a super brand isn't immune from the choppy waters of the economy. But there's no doubt that the sporting giant will come back fighting fit.
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