7:34 AM, Mar 8, 2017 — Athletic apparel retailer adidas (ADS.DE) has raised its sales and profit targets through 2020 after posting record results for the full year 2016 which were buoyed by strong performance in the brand’s Sport Performance unit.
Revenues increased 18% on a currency-neutral basis to 19.3 billion euros ($20.37 billion) while net income from continuing operations increased 41% to 1.02 billion euros, the company reported on Wednesday. Currency-neutral revenues for the company’s adidas brand increased 22%, supported by double-digit sales increases in the company’s Sport Performance unit as well as at the adidas Originals and adidas neo units.
At the Reebok brand, currency-neutral sales were up 6% versus the prior year, reflecting double-digit sales increases in Classics as well as mid-single-digit growth in the company’s training and running categories, according to the results.
Adidas said that it expects revenue adjusted for currency fluctuation to increase between 10% and 12% on average per year through 2020, rather than increasing it at a high-single-digit rate which was the previous goal. Kasper Rorsted, the chief executive who took over in October, sees net income from continuing operations growing between 20% and 22% on average per year through 2020. The previous target called for an increase by around 15% on average.
“Following an exceptionally successful 2016 financial year, adidas is significantly increasing its long-term guidance,” the company said. “The company intends to strongly accelerate sales and earnings growth until 2020 as part of its long-term strategic business plan.”
The company estimates that e-commerce revenues from its adidas.com and reebok.com websites will increase to 4 billion euros ($4.22 billion) by 2020 from 1 billion euros in 2016. The previous plan called for an increase to 2 billion euros by 2020.
Management seeks to reach the new targets by “harmonizing and simplifying business processes”, including reducing the number of articles offered and overhauling marketing activities, Adidas said. The company plans to step up investment into its US business, to strengthen its position in the world’s largest sportswear market.