Adidas, the maker of athletic apparel and sporting goods, said Tuesday its net profit fell 11% in the first quarter as marketing costs related to the Reebok brand and the comparison with last year's World Cup cut into profits.
The Herzogenaurach-based company, which competes with market leader Nike and cross-town rival Puma, earned 128 million euros ($174.27 million) in the January-March period, compared with 144 million euros a year earlier, matching the expectations of analysts polled by Dow Jones Newswires.
Earlier this year, Chief Executive Herbert Hainer had warned that first-quarter results would fall by between 10% to 20%. The company confirmed its full-year financial targets of 15% growth in net profit through the end of the year.
Sales rose 3% to 2.54 billion euros ($3.46 billion) in the three month-period, compared with 2.46 billion euros a year earlier, beating analysts' expectations of 2.51 billion euros ($3.42 billion), thanks in part to the consolidation of Reebok, which Adidas bought in 2006 for $3.8 billion.
Adidas said it still expects currency-adjusted sales to increase in a mid single-digit percentage range. Reebok revenue is expected to rise at a low-single-digit rate while the Adidas brand should post sales growth in a mid-single-digit range in 2007.
"Our group has gotten off to a strong start in 2007," Hainer said. "The Reebok integration is beginning to pay off as we realize the first revenue and cost synergies. Adidas and TaylorMade-Adidas Golf impressed with strong product launches."
Shares of Adidas were down nearly 1% to close at 42.23 euros ($57.50) in trading Monday.