adidas Group achieves sales and earnings targets in 2014
The company to sell Rockport to a new entity formed by Berkshire Partners and New Balance
Based on preliminary unaudited figures for 2014, the adidas Group reached its updated top- and bottom-line financial targets on an underlying basis. Excluding the impact from the divestiture of the Rockport business, currency-neutral Group sales increased by 6% in 2014. In euro terms, sales were up 2% to € 14.8 billion (2013: € 14.5 billion). Net income attributable to shareholders reached the earnings target of around € 650 million, excluding goodwill impairment losses and the impact of the Rockport divestiture. All sales channels contributed to this positive top-line development, with strong double-digit growth in Retail. From a brand perspective, adidas sales grew 11% currency-neutral for the full year. Reebok recorded its seventh consecutive quarter of growth in the fourth quarter and ended the year with a currency-neutral sales increase of 5%.
adidas Group CEO Herbert Hainer commented: «Our strong sales momentum for adidas and Reebok continued through the fourth quarter, with the Group recording double-digit growth in Western Europe, Greater China, European Emerging Markets and Latin America. Despite continuing pressure as a result of further currency weakness in Russia/CIS, we achieved our 2014 earnings target. Now we are looking forward to 2015 where we will continue to invest in our growth opportunities and present our long-term vision for the successful future of the adidas Group».
The adidas Group net income for 2014 will be impacted by two non-operational items. Goodwill impairment losses related to the Group’s Russia/CIS cash-generating unit largely as a result of the significant deterioration of the Russian rouble amount to around € 80 million. In addition, the successful conclusion of negotiations to divest the Rockport business, which was announced in a separate release today, will have a negative non-operational P&L impact in a double-digit million Euro amount. Final full-year results will be released on March 5, 2015.
The adidas Group announced last week that it has entered into a definitive agreement to sell its Rockport business to a new entity formed by Berkshire Partners and New Balance for a total consideration of $280 million, most of which will be paid in cash with the remainder comprised of notes. New Balance will contribute its Drydock business to the new entity which will create a leading collection of global footwear brands including Rockport and Drydock’s Aravon, Dunham and Cobb Hill brands. The transaction, which is subject to customary closing conditions, is expected to be completed later in 2015. As a result of the transaction, the adidas Group will record a non-operational negative P&L impact in a double-digit million Euro amount, which will be reported in discontinued operations as part of the company’s 2014 results.
«Rockport is a brand that has performed well over the last years. However, our focus is clearly on sport and operating a brand portfolio with a clear agenda to unleash the potential of athletes and inspire consumers to live active lives. The brown shoe category is not core to this strategy and the sale of Rockport will allow us to reduce complexity and pursue our target consumer more aggressively with the adidas, Reebok and TaylorMade brands», said Herbert Hainer, CEO of the adidas Group.
Headquartered in Canton, MA, The Rockport Company, LLC is a leading global designer, developer, manufacturer, distributor and retailer of innovative, high-quality footwear specially engineered for comfort under the Rockport brand. Rockport offers a full line of men’s and women’s footwear which is sold through a global multi-channel distribution network. Guggenheim Securities, LLC acted as exclusive financial advisor to adidas AG and Ropes & Gray LLP served as legal counsel.
About the adidas Group.The adidas Group is a global leader in the sporting goods industry, offering a broad portfolio of footwear, apparel and hardware for sport and lifestyle around the core brands adidas, Reebok, TaylorMade and Reebok-CCM Hockey. Headquartered in Herzogenaurach/Germany, the Group employs more than 50,000 people across the globe and generated sales of € 14.5 billion in 2013.