Shares in Adidas rose 1.2% to €75.22 in Frankfurt, valuing the company at €15.7bn. The stock is up 30% this year.
German sportswear company appoints investment bank to explore options for business, which includes TaylorMade, as sport falls out of favour
ADIDAS has put its golf division, which includes the world’s biggest golf brand, Taylor Made, up for sale as the popularity of the sport wanes.
The German sportswear company has instructed an unnamed investment bank to explore options for the business, and announced on Thursday that golf sales fell 26% in the second quarter.
The decline of the game has been particularly marked in the US, Adidas’s biggest market. Although America has 45% of the world’s golf courses, the number has fallen in recent years from 16,000 to 15,300 in what the National Golf Foundation describes as a “gradual, but steady, market correction”.
A turnaround plan attempted to improve its golf pricing and promotions and make big cost savings, particularly in the TaylorMade brand, which it bought in 1997 along with Salomon. The company also bought the Ashworth golf brand for $72.8m (£47m) in 2008 and Adams for $70m in 2012.
Adidas tried restructuring the golf business last year and brought in a new chief executive, David Abeles, for the unit in March.
Zuzanna Pusz, an analyst at Berenberg, said Adidas was trying to offload the part of its golf business that made clubs, where sales are falling, while retaining footwear and apparel.
However, it was not clear whether the company would be able to find a buyer given the poor growth prospects for the hardware business, she said.
Despite the German company’s woes on the fairway, overall sales rose by 5% on a currency-neutral basis in the quarter as the Adidas and Reebok brands continued to prove popular with consumers globally.
Excluding the impact of currency movements, sales were up 15% to €3.9bn compared with the same period in 2014 – €100m better than expectations. For the half year, group sales rose 7%.
Herbert Hainer, the Adidas chief executive, said: “I am pleased to see how well Adidas and Reebok are resonating with their respective consumers. We are very confident that the robust momentum of our core brands Adidas and Reebok will continue throughout the second half of the year.”
In currency-neutral terms, second-quarter sales in North America were flat, while jumping 19% in greater China and plunging 14% in Russia.
Pusz said the momentum at Adidas was continuing but it was spending a considerable amount to achieve it. The company spent 14% of revenue on marketing in the second quarter, she said, compared with an average of between 10% and 11% for competitors such as Nike and Under Armour.
Adidas has also benefited from the weak euro this year, Pusz said. Its sourcing costs, which are denominated in US dollars, are still hedged at last year’s exchange rates, when the euro was stronger.
Net profit for the second quarter rose 1% to €146m, just short of expectations. Gross margin fell 0.9 percentage points to 48.3% in the quarter, mainly due to lower margins in the golf business.
Shares in Adidas rose 1.2% to €75.22 in Frankfurt, valuing the company at €15.7bn. The stock is up 30% this year. Telegraph.co.uk