adidas AG (XETR: ADS.DE) announced its 2021 Q3 financial results on November 10, 2021. According to the annoucement, net sales was up 3.4% (3 months, YoY). On the other hand, operating profit was down 8.5%. Gross margin was decreased by 0.2 pp due to currency fluctuations and supply chain costs. However, it was still recorded as 50.1%.
In 2021 Q3, adidas signed an agreement to sell the Reebok brand to Authentic Brands Group for a total consideration of up to 2.1 billion EUR. In this regard, adidas recorded 504 million EUR gain from discontinued operations in this quarter. As a result, net income was up 70.6% (3 months, YoY). However, diluted EPS from continuing operations was down 9.3%. adidas’ stock price fell momentarily by more than 5% on November 10.
Looking at net sales growth by region, Latin America had the highest growth of +53.4% (3 months, YoY). It was followed by EMEA of +8.1%. Greater China, on the other hand, showed the largest decline of -11%. It was followed by Asia Pacific of -9.6%.
adidas may have concerns on the future lower growth rate of net sales and profits due to the divestiture of its business segment. It may also have concerns about deterioration of its profit structure due to supply chain costs. However, its overall business performance currently looks good. Thus, we do not consider them to be major concerns from long-term perspectives.
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