It would appear “Russia” is the new “weather” when it comes to missed earnings expectations. As Bloomberg reports, Adidas shares fell by a record after the world’s second-largest sporting-goods maker slashed its full-year profit forecast, bursting euphoria around the German company less than a month after its national team’s victory in the World Cup. The reason, aside from golf, “turmoil in Russia,” which just happens to be its most profitable region. But Jack Lew promised that there would be no impact?
Adidas said profit this year will miss its forecast by at least 180 million euros ($241 million). The shoemaker and apparel maker scrapped a long-standing growth target for next year, citing a slump in demand for golf supplies in North America combined with turmoil in Russia. The shares tumbled as much as 16 percent in Frankfurt trading, the biggest intraday drop since the company’s 1995 initial public offering.
“You could argue they’ve been a victim of their own success,” said John Guy, an analyst at Berenberg Bank in London who recommends buying the shares. “Russia is one of their most profitable regions,” and now a dispute with Ukraine and economic sanctions against Russia are weighing on the outlook.
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Net income this year will be about 650 million euros, Herzogenaurach, Germany-based Adidas said in a statement, down from the earnings of 830 million euros to 930 million euros the company had previously anticipated.
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Adidas said it plans to close stores and delay openings in Russia, a market where 2013 sales exceeded 1 billion euros. Adidas had previously planned to end this year with more than 100 net new stores, spokeswoman Katja Schreiber said.
The company had named Russia and the former Soviet countries one of its three “attack markets,” which were supposed to contribute about half of the company’s sales growth.
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Who could have seen this coming in what Putin called the ‘interconnected world’? It would seem the Europeans will soon be asking Washington to stop with the “costs”…
via Zero Hedge http://ift.tt/1oQozwB Tyler Durden