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ADIDAS AG, the world's second-largest sporting-goods maker, reported a 32-percent increase in first-quarter profit yesterday after the 2006 acquisition of Reebok International Ltd helped it obtain cheaper prices from suppliers.
Net income climbed to 169 million euros (US$262 million), or 84 cents a share, from 128 million euros, or 63 cents, a year earlier, the Herzogenaurach, Germany-based company said in an e-mailed statement. That beat the 158.9-million-euro average estimate of four analysts compiled by Bloomberg News.
Adidas rose as much as 5.6 percent in Frankfurt trading, the steepest intraday gain since March 25.
The company stuck to its forecast that profit will gain at least 15 percent this year.
The company's gross margin, a profitability gauge, widened by 2.9 percentage points to 49.1 percent, also helped by new stores.
"The Reebok purchase has generated synergies for adidas, but the brand still underperforms," Oliver Caspari, an analyst at Bankhaus Lampe in Dusseldorf, Germany, said. "Also currency effects and a better product mix helped improve margins." Caspari advises buying adidas shares.
Adidas, which will supply uniforms to five teams playing in next month's European soccer championship, boosted sales of balls, shoes and team outfits, including those of Germany and France, spokeswoman Anne Putz said.
Adidas yesterday advanced as much as 2.32 euros to 42.72 euros in Frankfurt and traded at 42.64 euros, the second-biggest gain in Germany's benchmark DAX Index.
"Adidas reported an excellent first-quarter earnings performance," UniCredit SpA analyst Uwe Weinreich said yesterday in a note, reiterating his "buy" rating.
First-quarter revenue rose 3 percent to 2.62 billion euros and climbed 8 percent under the adidas brand. The number of its own stores increased to 604 from 444 a year earlier.
Reebok sales declined 13 percent to 454 million euros and fell 6 percent, excluding currency movements, the company said.
"The Reebok brand positioning will take some time," Chief Executive Officer Herbert Hainer said.
"The economic environment is not favorable at the moment," he added.
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