Adidas report Q1 2015

The report from Adidas is out since some time and I keep my fingers crossed that I will manage to push out all the brief summaries of the Q1 reports as well as the analysis of all the DAX companies before the month of May is over because soon the Q2 reports will start to drop in and with them I do not want to be silly late as I am now. So what was in the Adidas report?

For the report in full please go here and to see my previous summary please visit Adidas annual report 2014 and to find out more regarding Adidas then please go to analysis of Adidas 2015.

The CEO, Herbert Hainer, that I am little sceptical towards due to Salomon, TaylorMade etc. was proud that the rebound of Adidas had been so fast. I hope that he did not speak too quickly. He then also writes something that I do believe is true and that is that they are now pushing their new strategy for 2020 and he admits that Adidas has in the past not been good in follow through with their strategy pushes. Here is exactly what I mean... this guy has been sitting as a top manager in Adidas for a long time. Admits that strategies have not been pushed as they should... so I fear it will not work out this time either. If a company is having issues to implement strategies then an external CEO needs to be brought in to shake up the structures a little. It is very easy that too many people are too comfortable in their positions and keep protecting themselves and their jobs by blocking the changes needed to progress. Only way is to fire them. If it is your buddy since 15 years that you went up the pyramid with then you are often not able to take that decision and I fear Herbert is stuck in that boat.

Anyway let us look at the highlight below. They have indeed manage to make a significant push up in revenue. I looked at the different segments to see if it was still based on World Championship jerseys for Germany but it was not so that was a relief! All the segments had increased sales with the golf segment having the lowest increase but still, well done! The net income was up by 17% which is great but we should however keep in mind that Q1 2014 was very bad so they have an easy time to compare themselves. The operating expenses are up, and up substantially since they report it in %-age of the sales. They are currently making a massive advertisement push and they do it over all channels of social media. A fashion blogger have often an even stronger impact than what an extremely high paid sportsman/woman has and you can probably get the blogger cheaper.

Conclusion: Adidas is off to a good start. I think that their strategy change looks promising but my fear is that Herbert will not manage to push it. I hope that he will surprise me and manage to do it because in the end we both want the best for Adidas and I like things to run with long term goals and strategies with strong CEOs that genuinely cares for the companies they work for and I am sure that Herbert does that. I will remain as a shareholder.