Adidas lifts profit forecast ahead of Euro soccer tournament

Bloomberg

Adidas AG raised its full-year profit forecast for the second time in less than three months after first-quarter results beat its own expectations and as consumers spend more ahead of the Euro 2016 soccer tournament.
Net income from continuing operations will rise 15 percent to 18 percent this year, more than a prior range of 10 percent to 12 percent, the Herzogenaurach, Germany-based company said in an unscheduled statement on Wednesday. The shares rose as much as 6.3%, the most in more than three months.
The increased forecast provides a further boost for incoming Chief Executive Officer Kasper Rorsted. Rorsted is due to join from Henkel in August, right before the start of the Olympic Games in Brazil.
Along with the Euro 2016 championships in France, the games will help drive demand for sneakers and sportswear.
“Momentum in the business looks to be accelerating,” Graham Renwick, an analyst at Exane BNP Paribas, said in a note. “Sportswear remains a very attractive sector, and there are signs that the Adidas strategy is starting to deliver.”
The increased forecast reflects strong brand momentum and better-than-expected first-quarter results.
The company will provide more details when it reports full quarterly results on May 4.
More consumers participating in sports such as running and soccer worldwide helped boost growth, said Cedric Rossi, an analyst at Bryan Garnier& Co., who recommends buying the shares.
“What’s driving growth is the backlog from the Euro tournament,” he said, also citing this summer’s Copa America soccer championship, where Adidas will sponsor the Argentina and Colombia teams.
Outgoing CEO Herbert Hainer had promised that Adidas would complete a review of its struggling golf business in March, yet the company hasn’t made the results public yet.