Adidas retail sales offset global demand slump

Adidas’ expansion of its own stores worldwide lifted retail sales in its latest quarter, offsetting stuttering demand in markets such as the UK and Japan.

Adidas revealed sales from its owned branded outlets helped spur retail sales in 2014.

The sportswear business has accelerated the launch of new stores for its Adidas Originals, Reebok and running apparel since the turn of the year as part of wider push to create more premium brand experiences. Its revamped stores offer wi-fi equipped lounges and mobile charging points to encourage visitors to spend longer in the outlets and ultimately increase the likelihood of purchases.

The investments helped lift retail sales 10 per cent in the first quarter to €794m (£652m) compared to €722m (£593m) in the same period last year. Like-for-like sales were up 8 per cent in the period with Adidas crediting double-digit sales growth from Adidas and Reebok outlets for the upswing.

Adidas increased its quarterly sales and marketing budget by 2 per cent year-on-year to €444m (£364m) to support the retail drive, particularly for its Reebok brand.

Herbert Hainer, Adidas chief executive, says the “strong performance” of its retail strategy was “masked” by double digit declines at its TaylorMade-Addias Golf business as well as by sales losses in the UK, Italy, Japan and Australia. The performance sapped global sales by 6 per cent year-on-year to €3.5bn (£2.9bn).

Adidas says its upcoming World Cup activity, its biggest football marketing campaign to date, will stem the losses over the summer after football sales rocketed 27 per cent year-on-year in the quarter. The campaign launches later this month with the company targeting an additional €2bn (£1.6bn) from football sales this year.

Heiner adds: “I expect a strong second quarter to point the way forward to a sustained period of growth and momentum for our Group. Later this month, we will unleash our largest football offensive ever ahead of the 2014 FIFA World Cup. The energy and intensity of our campaign and product concepts will be a clear statement and sign of things to come from our group as we drive towards the realisation of our strategic goals and our 2014 financial guidance.”

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