Adidas gives upbeat '08 outlook after strong Q3

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FRANKFURT, Nov 8 (Reuters) Adidas gave an upbeat 2008 outlook thanks to brisk growth at its adidas brand, which helped Europe's biggest sports goods maker to a 22-percent rise in third-quarter net income, ahead of analysts' estimates.

''2008 is set to be even stronger than 2007,'' Chief Executive Herbert Hainer said in a telephone conference on Thursday.

In its first guidance for next year, Adidas said it expects group sales to increase at a high-single-digit rate on a currency-neutral basis and net income to grow faster than the nearly 15 percent in 2007 with major sporting events in sight.

It kept its outlook for 2007, but now saw its gross margin at the upper end of its previous guidance.

Adidas shares rose 3.5 percent to 47.45 euros euros by 1227 GMT, while Germany's DAX index was up 0.3 percent.

''Excellent third quarter results which underline the strong momentum of the adidas brand,'' Equinet analyst Ingbert Faust told clients in a note.

Third-quarter net income advanced to 298 million euros (7.3 million), beating the average estimate of 285 million euros in a Reuters poll of 18 analysts.

In euro terms, sales rose to 2.941 billion euros from 2.949 billion euros, slightly below the average poll estimate of 2.983 billion euros.

This was mainly due to declining sales at its Reebok unit, but Hainer said he expected the order backlog for Reebok to grow in the second half of 2008, fuelling sales in 2009.

''The effects of our integration efforts are starting to become visible. Now we just need to pick up the pace,'' he said.

Its adidas brand recorded the highest backlog growth in over nine years, it said, with an increase of 16 percent at the end of September on a currency-neutral basis, growing strongly in Europe ahead of the European soccer championships next year.

The growth momentum would continue in the fourth quarter, Hainer said, with increases in the group's sales and earnings.

SUBPRIME CRISIS The U.S. market remained a challenge and Hainer said the subprime crisis had not helped to boost consumer demand.

Slowing mall traffic is hurting business of major customers such as Foot Locker which is shutting hundreds of shops and is not ordering many new goods.

This also dented earnings of Adidas' arch-rival Puma which, earlier this week, reported an almost 10 percent drop in third-quarter U.S. sales.

U.S. peer Nike, however, managed to remain largely resilient to sluggishness in the U.S. footwear market. The world's largest athletic shoe and clothes maker reported in September a 51-percent rise in quarterly net profit to 569.7 million euros as a weak dollar boosted revenues.

Nike trades at around 18 times 2008 earnings per share, while Adidas trades at a multiple of 14 and Puma at about 15, according to Reuters Estimates.

For this year, Adidas expects currency-neutral sales to grow by a mid-single-digit percentage and net income to grow close to 15 percent, with a gross margin at the upper end of a 45 to 47 percent range. Its third-quarter gross margin rose 3.6 percentage points to 48.6 percent.

It now expects sales at its adidas brand to grow at a high-single-digit rate on a currency-neutral basis compared to a mid-single-rate targeted previously.


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