Adidas Announces New Share Buyback Programme as Profits Jump

Adidas AG reported stronger-than-expected fourth-quarter profits and announced a new share buyback programme as the German brand looks to maintain its momentum with retro sneakers and new running and football products.

The German sportswear company generated operating profit of €164 million ($196 million) in the fourth quarter, it said in a statement of preliminary figures late Thursday. That exceeded analyst estimates and drove full-year operating profit slightly above its forecast from October.

The company further announced a €1 billion share buyback programme that will start in February and be financed through the company’s cash flow generation this year. It intends to terminate the repurchased shares, it said.

Currency-neutral sales, however, only reached €6.08 billion for the quarter, slightly behind analyst estimates.

Adidas’s performance has suffered from the weaker US dollar and tariffs, with currency swings impacting its revenue by more than €1 billion last year, it said.

The company’s American depositary receipts rose 1.5 percent after the close of trading in Europe. Adidas shares have fallen more than 40 percent in the past year.

Chief executive officer Bjorn Gulden is hoping to forge more growth engines — particularly with sports products — after capitalising from robust demand for its three-striped retro sneaker models including the Samba and Gazelle. The Norwegian is entering his fourth year as CEO, which he’s long pointed to as the time when Adidas should become a “healthy company” again. He has talked of striving to grow sales at double-digit rates and reach an operating profit margin of at least 10 percent.

Investors have cast skepticism on Adidas’s ambitions, with some analysts suggesting the world’s years-long sneaker boom is slowing.

Gulden is hoping Adidas can keep grabbing market share from rival Nike Inc., which is looking to stage a comeback after years of struggles. Both companies are hoping to capitalise on the coming football World Cup in North America this year.

Adidas will publish its full financial results and offer initial guidance for this year on March 4.

By Tim Loh

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