Adidas shares hit record high after profits beat expectations
- Adidas reported a 17% rise in first-quarter net profit.
- Sales growth slowed due to supply chain issues in North America and a decline in Europe.
- CEO Kasper Rorsted expects the European business to return to growth in the fourth quarter.
Adidas reported a 17% rise in first-quarter net profit on Friday, even as sales growth slowed as it suffered from supply chain issues in the North American market it had already flagged, as well as a decline in Europe.
First-quarter sales rose by a currency-adjusted 4% to 5.883 billion euros ($6.57 billion), while attributable net profit came in at 632 million, beating analyst consensus for 5.8 billion and 567 million respectively.
Adidas warned in March that it expects supply chain issues to curb sales growth in the first half of the year, particularly in North America, where it has doubled its business in the last three years to take market share from bigger rival Nike.
Adidas shares climbed 7% Friday morning as markets reacted to the results. Reuters reported that the share price had also hit its all-time high.
CEO Kasper Rorsted told CNBC's "Squawk Box Europe" that investors should get used to "high single digit growth rates" and the 4% growth rate is a "temporary position."
"The challenge we have right now is we can't really supply the market," he said.
"We're in a situation where the demand is higher than the supply. We should have managed that better but still, a better situation to be in than the reverse where the supply is bigger than the demand," he added.
Rorsted attributed slower growth in Europe to the brand being "over-reliant" on its leisure business, a situation he promised will turn around.
"Europe being a third of our business has to contribute to our growth," he said.
"We will see Europe revert to growth at the end of the year, so we are going to go one or two quarters more with negative or flat growth in Europe, and then of course Europe has to get back to growth."