Adidas had a better than expected fourth quarter, but its outlook for the year looks decidedly shaky.
Adidas, the world’s largest sports apparel company by revenue after Nike, said that its net profit in the three months to December rose to 54.0 million euros ($68.2 million), from 21.0 million euros ($26.1 million) the year before, ahead of estimates, as it cut back marketing costs and sales rose 6.0%, driven by demand for its own line of products, as well as its specialist TaylorMade golf segment. Annual net profit rose 16.0% for 2008.
However, initial euphoria evaporated rapidly and by the end of trading on Wednesday, Adidas (other-otc: ADDDY – news – people ) shares were up just 0.1%, or 3 euro cents (4 cents), at 22.93 euros ($28.97), reflecting investor concern about what lies in store for 2009 as consumer demand across the globe dwindles.
For one thing, the company shows little sign of having shaken off the troubles at its Reebok division, where sales fell 8.0% in the fourth quarter of 2008.
The company is gloomy about the year ahead, warning that the impact of the downturn on the sports goods industry this year was “subject to a high degree of uncertainty.” The company also scrapped its November target of achieving growth in 2009, and said it expected sales, in constant currency terms, to decline at a “low-to-mid-single digit rate” in the year.
The firm said that while the company was taking cost cutting measures, this wouldn’t completely offset the impact of falling demand.
In 2009, the sports clothing industry is being hit by the double whammy of a global economic downturn, and a year without any major sporting event–such as the Beijing Olympics which spurred demand in 2008. Last month, Nike (nyse: NKE – news – people ) warned that it may have to cut 1,400 jobs or 4.0% of its workforce in light of the economic situation. In January, Adidas said that 300 jobs would go during ongoing restructuring at Reebok.