Adidas slips into Europe as Stan Smiths and superstars go out of style

BERLIN (Reuters) – Adidas (ADSGn.DE) cut its forecast of turnover for 2018 on Wednesday after the decline in third-quarter sales in Western Europe, affected by fashion trends and by Nike's strategy (NKE.N) football earnings.

While the German sportswear company is gaining market share in North America, its American rival is gaining ground in Europe, thanks to the strong performance of the teams sponsored by Nike at the World Cup football and the launch of its Phantom range.

Adidas shares, which grew 12% year-on-year, lost 2.3% in 0954 GMT after lowering their 2018 target for growth in neutral currency-traded revenue from "around 10%". "at 8 to 9%.

Managing Director, Kasper Rorsted, has focused on improving profitability at Adidas since taking office in 2016, focusing on growth in North America and Asia and on e-commerce , where margins are higher than those of stores.

Adidas said it expects net income from continuing operations in 2018 to increase by 16 to 20 percent, compared to previous forecasts of 13 to 17 percent.

After announcing previously that sales in Western Europe are likely to be stable in the second half of the year, Adidas said adjusted sales of currency effects in the region fell 1% in the third quarter.

According to Rorsted, Adidas relied too much on retro Stan Smith and Superstar shoes, which fell out of fashion, and not enough on sportswear.

"We are a sports company. We should have done a better job in the sports channel, "he told reporters.

NOT FAST ENOUGH

In addition, Adidas has not responded quickly enough to the demand for its new models, such as Continental shoes, and has overestimated some products, factors on which it is now interested, added Rorsted.

Adidas continued its strong growth elsewhere, with sales up 16% in North America and 15% in Asia Pacific.

Online sales jumped 76% in the quarter and the launch in September of Yeezy Boost shoes designed by rapper Kanye West helped Adidas generate traffic on its website. Sales and margins for new styles have therefore exceeded expectations.

Overall, Adidas announced third-quarter revenue of € 5.873 billion, down 8 percent from market expectations. Net income from continuing operations jumped 19% to 656 million euros, exceeding the consensus.

German rival Puma (PUMG.DE) raised its revenue and operating profit outlook last month by announcing strong sales growth in the Americas and Asia, and saying that its first 20-year-old basketball shoe was well received.

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