Running too fast

3 November 2016 By Olaf Storbeck

The German sports brand’s revenue is growing fast, and its operating margin is increasing. Still, the 15 pct rise in earnings in the third quarter fails to justify a 55 pct rise in the share price this year. Adidas doesn’t deserve a 35 pct premium to more profitable Nike.

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German sportswear group Adidas’ sales in the third quarter rose 13.8 percent compared to last year to 5.4 billion euros, in line with the average expectation of analysts polled by Reuters. The group’s operating profit increased 11.5 percent to 563 million euros.

Adidas shares were down 4.8 percent to 139.55 euros by 0900 GMT. Since the start of the year, the stock is up 55 percent.

New Chief Executive Kasper Rorsted, who took over from long-serving boss Herbert Hainer in October, said the company would restructure its Reebok brand, involving 30 million euros of one-off costs.

Adidas reiterated a forecast from July for 2016 currency-adjusted sales to grow at a rate in the high teens and for earnings from continuing operations to rise at a rate of between 35 percent and 39 percent.

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