Executive Summary

• German athletic and sportswear company Adidas Group reported 3Q16 net sales of €5,413 million, up 13.8% on a reported basis and up 17.0% on a constant-currency basis. Net sales for the quarter were above the consensus estimate of £5,368 million. The strong revenue increase was underpinned by double-digit sales growth in all the group’s geographic markets except Russia.
• 3Q16 gross margin contracted by 90 basis points year over year to 47.6%, due to foreign-exchange headwinds. Underlying EPS of €1.88 expanded 12.6% year over year, in line with the analyst consensus estimate.
• For fiscal year 2016, the company confirmed its guidance outlook for group sales to increase in the high teens rate at constant currency. FY16 gross margin is expected to be in the range of 48–48.3%, compared to 48.3% in FY15. The operating margin is expected to reach up to 7.5%, marking a 100bps expansion from 6.5% in FY15. Net income is expected to improve to a range of €975 million to €1 billion, up between 35–39% year over year.