Adidas'S Fourth Quarter Profit Surged 63%

On Wednesday, German clothing manufacturer Adidas (Adidas) (ADDYY) reported fourth quarter earnings growth of 63% over the same period last year.

The company said that despite the poor sales of Reebok brand sports shoes in the weak US market, orders for its own brand footwear products rose sharply due to strong demand in Europe and Asia.

The company announced that its fourth quarter profit increased from 13 million euros in the same period last year to 21 million euros (US $32 million), and sales increased 8% to 2 billion 420 million euros compared with the same period last year.

The fourth quarter is usually the period when its performance is weak.

The German company pointed out that the cost synergy of the acquisition of Reebok not only contributed to the fourth quarter profit growth, but also offset the adverse effects of rising sales expenses.

The main reason for strong revenue growth is the excellent sales of Adidas brand products and TaylorMade-Adidas products.

Wall Street economists expected the company to earn 24 million euros in the fourth quarter and 2 billion 390 million euros in sales.

The company is a competitor of Nike (Nike) (NKE).

As of 12:30 p.m. Eastern time, Adidas shares rose 15 cents to $31.75, or 0.5%.

But in the past three months, the company's share price has fallen by 11%.

"The main reason for our success is to build excellent brand thinking and excellent management team," said Herbert Hainer, chairman and CEO of the company.

The company's financial position is very optimistic.

On the eve of the 2008 football championship in Europe, the outstanding orders for Adidas's brand products hit a ten year high.

Reebok's undelivered orders are less impressive. If the exchange rate remains unchanged, it will drop by 8%, or 14% in euros.

The company said that the reduction in the number of retailers based on shopping malls was the main reason for Reebok's poor performance.

Ingbert Faust, an analyst at Equinet, a German brokerage firm, pointed out that Adidas's performance was "excellent", but Reebok's performance was worse than expected.

Adidas reiterated its 2008 sales forecast.

If the exchange rate remains unchanged, sales are expected to increase by 9% in 2008, and gross profit margin increased from 47.4% last year to 47.5%.

Net income is expected to increase by at least 15% this year, more than 14% in 2007.

The company raised its dividend by 19% to 0.50 euros per share.

"We have fully deployed the European Football Championship and the Beijing Olympic Games, coupled with the implementation of the global brand strategy, and the company is expected to take another step this year," Hainna pointed out.