|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||143.51 - 146.64|
|52 Week Range||101.48 - 165.01|
|Beta (3Y Monthly)||0.56|
|PE Ratio (TTM)||32.23|
|Forward Dividend & Yield||1.88 (1.29%)|
|1y Target Est||225.83|
Aug.08 -- Kasper Rorsted, chief executive officer of Adidas AG, discusses second-quarter operating profit which missed estimates, squeezed by the cost of flying clothing from Asia to North America to fill a supply gap. He also discusses the negative consequences of a China-U.S. currency war during an interview on "Bloomberg Markets: European Open."
For many, the main point of investing in the stock market is to achieve spectacular returns. While the best companies...
(Bloomberg) -- To satisfy regulators, YouTube officials are finalizing plans to end “targeted” advertisements on videos kids are likely to watch, according to three people familiar with the discussion. The move could immediately dent ad sales for the video giant -- though not nearly as much as other proposals on the table.The Federal Trade Commission is looking into whether YouTube breached the Children’s Online Privacy Act (COPPA). The agency reached a settlement with YouTube, but has not released the terms. It is not clear if YouTube’s changes to ad targeting are a result of the settlement. The plans could still change, said the people, who asked not to be identified citing an open investigation.A spokeswoman for YouTube declined to comment. A spokeswoman for the FTC declined to comment. The agency is expected to levy a multimillion-dollar fine.Since targeted, or “behavioral” ads, rely on collecting information about the viewer, COPPA effectively bars companies from serving them to children under 13 without parental permission. These commercial messages that rely on mountains of digital data, such as web-browsing cookies, are integral to the business of Alphabet Inc.’s Google, YouTube’s owner.YouTube has long maintained that its primary site is not for children. (The company says kids should use YouTube Kids app, which does not use targeted ads.) But nursery rhymes and cartoon videos on the main site have billions of views. The platform’s many issues with children’s content-- horrific imagery, problems that led to disabling comments-- have troubled its video creators, worried parents and empowered rivals.Getting rid of targeted ads on children’s content could hit Google’s bottom line -- but this solution would be far less expensive than other potential remedies that aim to placate regulators.In April 2018, a slew of consumer groups complained to the FTC that YouTube regularly collected information about minors to use in targeted advertising. Once the FTC picked up the case, these groups suggested that the agency force YouTube to move all kids’ videos to its designated app for children, YouTube Kids. Joseph Simons, the FTC chairman, has floated another idea. He asked the complainants in a July 1 call whether they would be content with YouTube disabling ads on these videos, Bloomberg News reported earlier.YouTube’s new proposal is even less drastic.Right now, YouTube sells two different types of video ads, broadly speaking. One simply pairs the context of a video with a commercial message. So, a YouTube clip about basketball might have an ad from Adidas. The other type uses an array of digital signals. With these ads, marketers can reach viewers in a demographic group, such as homeowners or new parents, based on Google’s vast data troves -- websites people visit, searches they make and so on.YouTube doesn’t disclose ad sales or prices, but most digital ads are more lucrative when paired with targeting data. Other tech giants, such as Apple Inc., have tried to cull back data-collecting tools in services that kids use.Loup Ventures, a research firm, estimates YouTube’s revenue from children’s media between $500 million and $750 million a year. Paring back targeted ads would dent that revenue, although Google has the ability to make its contextual ads more compelling to mitigate the damage, said Doug Clinton, a Loup Ventures analyst. He pegged the potential impact of YouTube curbing targeted ads at 10% of its overall intake from kids’ videos-- so about $50 million. “That would be the worse case, in my mind,” he said.It’s not clear how YouTube would deliver this targeting ban with the thousands of video channels with whom it splits ad sales. It’s also unclear how YouTube would define which videos are “directed at children” and which aren’t.One certainty: This proposal is unlikely to please complainants. In a July letter to the FTC, the groups argued that bans on YouTube ad targeting would be difficult to enforce. Removing the feature from select kids’ videos doesn’t guarantee that YouTube stops tracking web habits if children watch other clips, said Josh Golin from Campaign for Commercial-Free Childhood, a complainant. “Is Google still going to be collecting all the data and creating marketing profiles?” he said. “That wouldn’t be satisfactory either.”Jeff Chester, executive director of Center for Digital Democracy, another complainant, said that if the FTC settlement only forced YouTube to curb targeting, his group would likely challenge the decision.(Updates with other companies in 10th paragraph.)\--With assistance from Ben Brody and Lucas Shaw.To contact the reporter on this story: Mark Bergen in San Francisco at firstname.lastname@example.orgTo contact the editors responsible for this story: Jillian Ward at email@example.com, Emily Biuso, Andrew PollackFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Athletic apparel giant Nike (NYSE:NKE) was having a great 2019 until recently. Back in mid-July, NKE stock was up roughly 20% year-to-date, largely in-line the S&P 500's 20% YTD gain. Unfortunately, escalating trade war tensions in August put a damper on Nike's good year. NKE stock has since dropped 10%. The S&P 500 is down just 3% over the same time frame.Source: TY Lim / Shutterstock.com Year to date, the S&P 500 is now up 16%, while Nike stock is up just 10%.In other words, thanks to U.S. President Donald Trump upping the trade war ante in early August with the threat of new tariffs on Chinese imports, Nike stock has gone from having a good year, to having a sub-par year.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Undervalued Stocks With Breakout Potential This recent weakness in NKE stock is overstated. It won't last, and it will be replaced by a strong end-of-year rally for three big reasons.First, the fundamentals supporting Nike remain exceptionally favorable, and pave a path for NKE stock to hit $100 over the next twelve months. Second, the optics surrounding Nike and the trade war are set to materially improve into the end of 2019. Third, the technicals imply that NKE stock is on the verge of a generational buying opportunity.As such, I'm bullish on NKE stock on this recent dip. This is a winning stock trading at an attractive discount, with huge catalysts on the horizon and a chart that says a big rebound is coming soon. Nike's Fundamentals Pave a Path Towards $100The biggest reason to buy NKE stock on this recent dip is because the fundamentals remain very strong, and pave a path for huge upside in NKE stock over the next twelve months.Nike is firing on all cylinders right now, which hasn't always been the case. Back in 2015, German athletic apparel maker Adidas (OTCMKTS:ADDYY) paired up with celebrity musician Kanye West to capitalize on the athleisure trend by blending culture with sports (the partnership actually started in 2012, but 2015 was when Adidas launched the first Kanye shoe). It was a genius move. From mid-2015 to mid-2018, Adidas rattled off a streak of twelve consecutive quarters of double-digit, constant currency revenue growth.This brilliant Adidas move had a negative impact on Nike. From 2015 to 2018, Nike's constant currency revenue growth rate slowed from 14% to 4%. But, recognizing that they were losing share to Adidas, Nike launched Consumer Direct Offense in 2017, which focused on streamlining investment dollars into trend-setting metro areas, doubling down on direct sales, and accelerating the innovation pipeline.Nike has since done all three of those things. And it has worked. Adidas' constant currency growth rate has decelerated to 4% in 2019. Nike's accelerated to 11%.In other words, Nike is back. Usually, these fashion trends last several years. Fiscal 2019 was really the first year of this Nike-first trend. Thus, it increasingly appears that Nike is in the first few innings of a new above-trend growth ramp.The athletic apparel market projects to grow at a 5%-7% rate into 2025/26. Nike should grow above that rate -- probably around 7%-8%. Gross margins should trend higher due to strong consumer demand. Opex rates should fall gradually with revenue scale.That paves a viable runway towards $6.75 in EPS by fiscal 2026. Based on historically average 25-times forward multiple, that equates to a 2025 price target of nearly $170. Discounted back by 10% per year, that implies a fiscal 2020 price target of roughly $105. Trade War Optics Will Materially Improve NKE StockThe second big reason to buy the dip in NKE stock is because trade war optics -- which have killed the stock in August -- will meaningfully improve into the end of the year.My theory here is pretty simple. President Trump is all about winning the 2020 election. He knows that his odds of winning that election are highest if the U.S. economy is firing on all cylinders ahead of the election, especially since he has tied his presidency's success to stock market highs and big GDP numbers. How does Trump get that "firing on all cylinders" economy ahead of the election? He needs low rates to juice the economy.That's why he has been so adamant about the Fed cutting rates. But, in late July, the Fed disappointed by cutting rates only 25 basis points and not sounding very dovish with respect to future rate cuts. The Fed did say, though, that the U.S.-China trade war is essentially the biggest risk to the U.S. economy. Who is behind that trade war? Trump. So, in theory, all Trump has to do to get the Fed to cut rates is temporarily accelerate the trade war.He did just that -- the very day after the Fed only cut rates by 25 basis points. That's not a coincidence. Trump doesn't want these tariffs to actually materialize and meaningfully damage the U.S. economy ahead of the 2020 election. He just wants the threat of them to create enough economic cross-currents to get the Fed to cut rates, at which point he will pull the tariff threats and reduce trade tensions.The result? An economy firing on all cylinders heading into the 2020 election, supported by reduced trade tensions and juiced by low rates.Given this framework, I think it is very likely that over the next few months, trade war optics improve dramatically. As they do, stocks that are at the epicenter of the trade war, like Nike stock, will bounce back in a big way. Technicals Imply We Are on the Cusp of a Generational Buying OpportunityThe third big reason to buy the dip in NKE stock is that the technicals imply that we are on the cusp of a generational buying opportunity in Nike stock. Click to EnlargeConsider the chart. Over the past decade, NKE stock has been on a solid uptrend with a very strong multi-year support line that has held three times before. After each successful "test-and-hold" of this multi-year support line, NKE stock proceeded to rally in a big way over the subsequent several years.NKE stock is on the verge of testing this support line again. If it does, history says that a successful test of the support line will precede a big multi-year rally in the stock. Bottom Line on NKE StockNike stock has been hit hard by the trade war over the past month. This recent weakness is creating a compelling buying opportunity into a high-quality stock supported by favorable fundamentals, optics, and technicals. As such, buying the trade war dip in NKE stock this month seems like the right move.As of this writing, Luke Lango was long NKE. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Cheap Dividend Stocks to Load Up On * The 10 Biggest Losers from Q2 Earnings * 5 Dependable Dividend Stocks to Buy The post 3 Big Reasons to Buy the Dip in Nike Stock appeared first on InvestorPlace.
When it comes to Under Armour (NYSE:UAA) stock, I've loved to play the contrarian for some time. And being contrarian on UAA stock has been immensely profitable over the past year.Back in November 2018, UAA stock was flying high at $24 after the athletic apparel brand reported third- quarter numbers which easily beat average expectations. I warned that the pop was unsustainable and that the bearish thesis actually looked pretty good. By December 2018, after Under Armour had a bad Investor Day and amid a broader market selloff, UAA stock had dropped to below $17.I recommended that investors buy the dip of UAA stock. Within a month, Under Armour stock had rebounded by more than 20%, at which point I advised investors to sell Under Armour stock. UAA stock continued to rally well after that, all the way to $28, and I kept insisting that the rally was unsustainable.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIn late July, Under Armour reported underwhelming numbers. Ever since, UAA stock has fallen off a cliff. Today, the stock trades hands at $18, roughly where it was in late 2018. * 10 Cheap Dividend Stocks to Load Up On Now it's time to buy the dip of Under Armour stock again. Here's why. Under Armour Stock Is Too CheapThere are three main reasons why it's time to buy the dip of UAA stock again. The first reason is that the stock is now way too cheap.My core thesis on Under Armour is pretty simple.: UAA is the wrong company in the right space. Under Armour is the wrong company because it hasn't innovated or adapted to trends . Namely, the athletic apparel market has pivoted from performance apparel to lifestyle clothes.Under Armour hasn't made that pivot, and as a result, it continues to launch products that - while good - aren't as relevant as the new lifestyle products from Nike (NYSE:NKE), Lululemon (NASDAQ:LULU), and Adidas (OTCMKTS:ADDYY). That's why Under Armour has continued to grow at a much slower pace than those peers (in Q2, for example, UAA's constant currency revenue growth was just 3%).Nonetheless, the athletic apparel space is the right space to be in now. Consumers increasingly want to live active and healthy lifestyles and look like they do so. This is creating a rising tide that's lifting all boats in the athletic apparel space, even the ugliest boats like Under Armour. That's why Under Armour's revenue has continued to grow, despite the company's lack of product innovation.This dynamic will persist. Going forward, Under Armour's top line looks poised to rise about 5% annually , with healthy margin drivers through continued gross margin expansion and positive operating leverage. I've said time and time again that UAA's earnings per share should reach $1,50 by fiscal 2025. Based on Nike's average forward price- earnings multiple of 25, UAA stock should reach $37.50 in 2024. Discounted back by 10% per year, that equates to a 2019 price target for UAA stock of about $23.Thus, in late July, UAA stock was way overvalued. Now it's way undervalued. The Optics Will ImproveThe second reason to buy the dip of Under Armour stock is that it will look more attractive over the next few months.A big driver behind the recent selloff of Under Armour stock is President Donald Trump's threat to impose tariffs on more Chinese imports. Ostensibly, that's a bad thing for all athletic-apparel companies, since a bunch of athletic-apparel products are made in China. As a result, investors have indiscriminately sold athletic-apparel stocks over the past two weeks.But Under Armour's China exposure isn't huge (only 10% of its products are made in China ). Further, a big chunk of these tariffs have already been delayed , yet another sign that Trump doesn't actually want the trade war to escalate that much and is just doing some chest-puffing with the tariffs he's already announced.All these trade-war fears will likely cool over the next several months as they have always done after trade-war flare-ups under Trump. This cooling will provide a lift for UAA stock. The Stock Is OversoldThe third reason to buy the dip of Under Armour stock is that the stock is technically way oversold, and is due for a bounce-back.The Relative Strength Index of UAA stock has dropped to 20, well into oversold territory. The last time the RSI of UAA stock was this low was back in late 2018. Under Armour stock proceeded to bottom in late 2018 and rally by more than 20% over the next month.A similar dynamic could play out this time around. Consequently, the technicals are saying that UAA stock is near a bottom and on the verge of a nice bounce-back rally. The Bottom Line on UAA StockUnder Armour is the wrong company in the right space., so Under Armour stock will not be a long term winner. Instead, it's a "buy the dip, fade the rally" stock. Right now, UAA stock is in the middle of its biggest selloff in recent memory, meaning that it's time to start thinking about buying the shares on weakness.As of this writing, Luke Lango was long UAA, NKE, and LULU. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Cheap Dividend Stocks to Load Up On * The 10 Biggest Losers from Q2 Earnings * 5 Dependable Dividend Stocks to Buy The post Why It's Time to Buy the Dip of Under Armour Stock appeared first on InvestorPlace.
For Adidas, big cities are key in shaping “global trends and consumers’ perception, perspectives and buying decisions”. Karen Parkin, head of global human resources at Adidas, admits without hesitation that, were consultants searching for the ideal base for a multibillion-euro sports and fashion brand, “of all the locations in the world, I doubt whether a pin would fall in Herzogenaurach”.
Skechers (SKX) is benefiting from its focus on new line of products, cost-containment efforts, inventory management, and global distribution platform.
Adidas celebrated its 70th anniversary on Friday with appearances at its Bavaria campus by sponsored athletes such as tennis veteran Stan Smith and German soccer legend Philipp Lahm, as well as celebrity partners like Pharrell Williams. Adidas opened a new building resembling a football stadium and housing 2,000 employees at its sprawling site outside the town of Herzogenaurach. "This puts us in a perfect position for the future, continuing on our international growth track," Chief Executive officer Kasper Rorsted told employees.
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. The trade war’s August escalation has spooked markets -- and central banks -- around the world. The bad news, though, is that while President Donald Trump has fired two large weapons in the past week by green-lighting his biggest swathe of tariffs yet and formally branding China a currency manipulator, his arsenal is far from exhausted.The loudest shot Trump could take may be the one that he increasingly appears focused on: weaponizing the dollar, the world’s reserve currency.In a series of tweets on Thursday he called for the Federal Reserve to cut rates and weaken the dollar to benefit American exporters, effectively shrugging off a long-standing G-20 compact the U.S. signed again just weeks ago for the world’s major economies not to engage in competitive currency devaluations.Inside the White House, hawks have been pushing for a direct intervention in currency markets by the Treasury by pointing to a slowdown in U.S. manufacturing, which many economists have blamed on tariffs imposed by Trump and uncertainty surrounding his trade war with China.Just how effective either a Fed cut or an intervention would be is unclear. The relevant Treasury fund has $92 billion in it. Even if the Fed were to join in, as it has in past interventions, and match that amount -- a $180 billion injection into a $5 trillion per day global foreign-exchange market might have a limited effect. It might also unnerve markets and have longer-term economic consequences.But while the president and markets are focused on a possible currency intervention, that’s far from the last weapon he has available, according to current and former U.S. officials, advisers to the administration and analysts.Drop in the Bucket“He’s only dipped into the deep well of the measures that could be used against China,” said Gary Hufbauer, a trade expert at the Peterson Institute for International Economics who was among the first analysts to identify the array of tariff measures Trump had available to him during the 2016 presidential campaign.Trump could turn back to his favorite tool, tariffs, and double-down on his threat to impose import taxes on all remaining imports from China, or some $300 billion in annual trade, by raising the levies he last week vowed to impose Sept. 1 from 10% to 25%. At a time when Trump is focused on currency movements, the irony is that move would weaken the yuan, as it has before, thus undermining his efforts to talk down the dollar. Yet Trump has used currency swings as justification for tariffs before.That’s far from the end of it.A Commerce Department proposal that would allow companies to ask for targeted duties against imported Chinese products would benefit from this week’s Treasury designation of China as a currency manipulator and, if implemented, could see a flood of new cases seeking protection and retaliatory tariffs.Beyond all that, Hufbauer argues the administration could raise further barriers to Chinese investment in the U.S. or target China’s energy supply by revoking waivers that allow Beijing to continue purchasing oil from Iran and Venezuela.Trump has said an easing of restrictions on sales to China’s Huawei Technologies Co. that was part of a now-ended truce during a meeting with Chinese leader Xi Jinping in Japan at the end of June will still go ahead. But the White House is holding off on a decision about licenses for U.S. companies to restart business with Huawei after Beijing boycotted purchases of U.S. farming goods, according to people familiar with the matter.Former and current administration officials also caution other export restrictions and policies targeting China that were on hold, or delayed as Trump pursued a deal, could be revived.Among those is the proposed blacklisting of Chinese companies involved in surveillance operations in China’s western Xinjiang province, where authorities have conducted mass detentions of Muslim Chinese.Robots, AIThe Commerce Department has also been working on broader export restrictions on products from emerging industries such as robotics and artificial intelligence that would require special licenses to be exported to places like China.The process to update the list of controlled technologies has been ongoing and likely will take until later this year to be finalized. American tech companies have been lobbying against a broad interpretation of national security or including wide categories such as semiconductor technology, arguing it could stymie U.S. research spending.There are multiple bipartisan bills in Congress that Trump could back such as one introduced recently that would require the Fed to manage the dollar’s value to benefit American exporters and impose a tax on inbound capital as well as others that would deny Chinese firms access to U.S. equity markets. Also circulating is legislation that would shut off Huawei and fellow Chinese telecoms equipment maker ZTE Corp. entirely from U.S. suppliers.Michael Pillsbury, an occasional adviser to the Trump administration, insists that while Trump “has more guns” he also has a more pragmatic view of China than his aides and is still eager to cut a deal. “The key is to get the message to Xi, and not with a blunderbuss,” Pillsbury said.The pressure Trump has applied already extracted meaningful concessions from China, Pillsbury argues, pointing to Beijing’s implementation of new intellectual-property courts.Pillsbury argued staging a deal to package up things like greater access to China for U.S. investment firms and purchases of U.S. farm products in exchange for some easing of tariffs at first would make sense for both China and Trump. That could leave difficult topics such as a U.S. push for a reduction in Chinese industrial subsidies and other economic reforms off the table for now.But some other people close to the administration see that as risky. Such a move could draw Trump into a bad short-term deal with China, they say. A more likely scenario may be Trump pausing his assault on China once tariffs are in place on all Chinese imports and offering businesses at least certainty over the landscape rather than focusing on a deal.Market PlungeThen again, those people say, a lot could still depend on markets. A thousand point drop in the Dow Jones Industrial Average may not sway the president, but a 5,000-point move could.That the U.S.-China relationship is at its lowest point since Trump took office has created a window for his hawkish advisers to push for a more aggressive approach. The only thing in their way is their own lack of coordination, according to Derek Scissors, a China expert at the American Enterprise Institute who has advised the administration.“The president is upset with China,” he said. “The door is open for critics of China to take a whole number of actions and they’re completely disorganized and have no sense of priorities.”To contact the reporters on this story: Shawn Donnan in Washington at firstname.lastname@example.org;Jenny Leonard in Washington at email@example.comTo contact the editors responsible for this story: Simon Kennedy at firstname.lastname@example.org, Sarah McGregor, Brendan MurrayFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- A year ago, Mike Ashley was being hailed as a possible savior of Britain’s rapidly depopulating shopping districts. Now, after the comically delayed announcement of his company’s annual results last month, the colorful sportswear billionaire looks like just any other struggling retailer.It’s 12 months since his Sports Direct International Plc struck a deal to acquire the ailing department store chain House of Fraser. Ashley, who had long stalked the business, now regrets the move. The acquired business has had an instantly negative effect on the wider group, which showed up starkly in its results statement.House of Fraser’s poor trading shouldn’t really have surprised anyone after years of chronic under-investment. Add in supplier problems and cautious consumers and it racked up more than 50 million pounds ($61 million) of losses from August to the end of Sports Direct’s financial year on April 28. Ashley is even losing money on House of Fraser stores where he’s paying no rent.While this hasn’t turned out to be the “Harrods of the high street” of Ashley’s dreams, he did at least manage to limit some of his financial exposure. Sports Direct paid 90 million pounds for the assets, and invested a similar amount in working capital, but it did pick up House of Fraser’s shop stock too. That might have been worth more than the purchase price.Ashley was never likely to keep all of House of Fraser’s stores. He’s still planning more upmarket outlets in Glasgow, Belfast, Liverpool and Newcastle. He’s keen too to sell more of the designer labels that have made his Flannels chain of smaller stores a hit, so having bigger flagship department stores will help. Many House of Frasers will probably be closed though.Ashley, who’s been targeted by U.K. politicians before because of his employment practices, can legitimately say he’s tried to save jobs. But turning around a chain with “terminal” problems (his words) was just too difficult. While he will no doubt be criticized, stemming financial losses and making Frasers – the new name for the high-end chain – smaller and higher quality make sense.Nevertheless, even this more limited ambition is a huge challenge, and his company has problems elsewhere. Its strategy of improving the attractiveness of its core Sports Direct stores – known for their “pile ‘em high and sell ‘em cheap” approach – hasn’t gained traction yet. Nike and Adidas are still reluctant to supply it with the latest sneaker models.An unexpected 674 million euro ( $754 million) tax bill – which caused that embarrassing delay in the results – was another unwelcome surprise and smacks of a group that’s spinning out of control. Indeed, Sports Direct’s management has been stretched thin by a string of Ashley investments that have also included Game Digital, a video game retailer, and Jack Wills, a struggling apparel supplier to affluent teens. This has been compounded by the departure of key executives, including the head of retail Karen Byers.In the current climate, Ashley’s strategy of having lots of high street property, in which he can drop different brands (which he usually buys on the cheap) appears sensible. In a distressed market, why not try to take advantage of the misery elsewhere? He might still take a fresh tilt at Debenhams, another British department store chain that’s now owned by a group of lenders and hedge funds.But Sports Direct appears to be fighting fires on too many fronts. Investors, who have pushed the shares down by 42% in a year, are right to be skeptical. Ashley has to win over the big brands for his Sports Direct chain, and some luxury names at House of Fraser. Given the history of his stores, that won’t be easy.While net debt is forecast to remain an undemanding 1.5 times in the current financial year, according to analysts, and the Sports Direct chain still generates cash, upgrading stores and making strategic investments isn’t cheap. As I’ve argued before, Sports Direct would be better off as a private company. Ashley, who owns 62% of the shares, says he has no intention of doing this because without outside shareholders he would be “uncontrollable.” But it’s hardly as if he’s been reined in by the demands of being a listed company.As it is, minority investors have little option than to hope he makes the right choices from here. There may yet be method in the Ashley madness, but he needs to prove that the last year wasn’t all just folly.To contact the author of this story: Andrea Felsted at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
On today's episode of Free Lunch here at Zacks, Associate Stock Strategist Ben Rains offers a quick global economic update. The episode also dives into Adidas (ADDYY), Lyft (LYFT), and Uber (UBER) earnings, and more...
(Bloomberg) -- Adidas AG said it’s more worried about a currency war between the U.S. and China than the possibility that President Donald Trump will increase tariffs on footwear.The German sportswear maker does as much as 45% of its business in the U.S. and China, and if the two countries weaken their currencies in a competitive tussle then it will ultimately come to hurt Adidas’s earnings when translated back into euros. There’s also the risk that such a conflict would slow down the world’s two biggest economies -- and everyone else.“There is no winner in a currency war,“ Chief Executive Officer Kasper Rorsted said on a call with reporters after releasing second-quarter earnings that narrowly missed estimates. “Eventually everybody will lose because it will lead to a slowdown in the global economy.”Fears of a currency war have rattled global markets this week, after Beijing moved to weaken the yuan amid Trump’s threat of new tariffs. Concerns eased slightly on Thursday when the People’s Bank of China set the daily fixing stronger than analysts expected.Rorsted’s warning is significant because Adidas in May signed an open letter to Trump warning of the risks of tariffs. That document, also signed by Nike Inc., Puma SE and other footwear companies, said new levies on shoes made in China would be “catastrophic for our consumers, our companies and the American economy as a whole.”The Adidas CEO said the German company was speaking for the footwear industry as a whole, rather than its own interests, when it added its name to the letter.While the U.S. imports the “vast majority” of shoes from China, Adidas ships only a small number of products along that route, Rorsted said. The German company has about 20% of its manufacturing capacity in China, but many of the products made there go to local buyers, who represent about 25% of Adidas’s overall business, Rorsted said.Shares DeclineThe company reported second-quarter operating profit that was slightly below the consensus forecast and confirmed 2019 targets, disappointing some investors who considered that outlook conservative. The shares fell for most of the day, then plunged as much as 8% -- the most intraday in almost three years -- after Rorsted told analysts that margins would decline in the second half of 2019.“The market had expected more,” Volker Bosse of Baader Bank said by phone. “In general, they’re on track, they have not missed, but look at their share price. It’s priced for perfection.”Shares were down 2.9% at 5:20 p.m. in Frankfurt, paring this year’s gain to 46%.One drag on earnings has been Adidas’s need to fly clothing from Asia to North America to fill a supply gap. The company has spent more on air freight to compensate for supply-chain bottlenecks affecting mid-priced apparel in North America, which it said in March would cut full-year growth by 1 to 2 percentage points. The snags will probably affect the company through the third quarter, Rorsted said in an interview with Bloomberg TV.“We are flying in products from Asia to make certain we can actually satisfy demand, which has been the constraining factor this quarter,” Rorsted said.While Adidas results were broadly in line with expectations, they were not enough to “drive further excitement” among investors, given recent share gains, Morgan Stanley analyst Elena Mariani said in a note.(Updates with falling shares, analyst’s comment in eighth, ninth paragraphs)\--With assistance from Lisa Pham, Anna Edwards and Matthew Miller.To contact the reporter on this story: Tim Loh in Munich at email@example.comTo contact the editors responsible for this story: Eric Pfanner at firstname.lastname@example.org, John LauermanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Adidas AG is going back to the 1990s with some of its new product launches to capitalize on the craze for chunky “dad sneakers” (inspired originally by the high-end fashion house Balenciaga).It’s a shame that the German sportswear maker hasn’t managed to stick with a more recent trend in the meantime: That of regularly upgrading its sales and profit forecasts. On Thursday it said it would only maintain its financial outlook for the full year, disappointing investors who’d been hoping for a boost. Its shares fell by as much as 3.5%.Adidas looks like it’s getting to grips with the issues that weighed on its performance last year, including weaker demand in Europe and not being able to supply American customers with enough mid-market clothing. European sales were flat in the second quarter, excluding currency movements, while North American sales rose 5.8% as the supply constraints eased.Reebok, the sneaker brand that Adidas’s chief executive Kasper Rorsted is trying to turn around, managed to eke out some growth in the three-month period. This was driven by demand for its Classics range, a favorite among millennials. Group sales in Asia slowed, though. What’s more, the cost of dealing with the U.S. supply shortages, such as flying in stock, took its toll on profit.There was brighter news on the company’s operating margin, which increased year-on-year to 11.7% from 11.3%. Indeed, given the signs of a sales recovery in the U.S. and Europe, it’s surprising that the company would only maintain its guidance for 2019 revenue to expand by 5%-8%, and an operating margin target of 11.3%-11.5% (it was 10.8% last year).Still, you can see why Rorsted might be cautious. Sales rose 4% in the second quarter, so there will need to be a step up to meet the existing guidance. That looks likely as the company recovers fully from those U.S. stock shortages. Yet adverse impacts from a trade or currency war between China and the U.S. can’t be ruled out. Adidas makes about one-quarter of its sales in China and manufactures about one-fifth of its products there.By leaving the margin outlook unchanged, Rorsted also gave himself some wriggle-room to invest to compete with Nike Inc. and to continue to rejuvenate Reebok.With the shares rising almost 50% this year, investors were clearly expecting more. But this is a marathon, not a sprint. To keep narrowing the stock market discount to Nike (on a share price to earnings basis), Adidas has to show that its remarkable recovery is not petering out. Chunky trainers will go the way of all fashions, Rorsted’s job is to create something more lasting.To contact the author of this story: Andrea Felsted at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
European shares rose for a second day on Thursday, as investors took heart from a stronger than-expected rebound in Chinese exports and steadying of the yuan currency after a week of turmoil centred around a renewed escalation of U.S.-China trade tensions. Down as much as 5% in a three-day rout that began late last week, the pan-European STOXX 600 index was up 0.8% on the day by 0714 GMT, adding to a minimal rise on Wednesday and with the tech sector leading gains. Latest earnings showed disappointing second-quarter sales from German sportwear company Adidas, sending its shares down 1.5%, while Thyssenkrupp gained 2% in the face of a fourth profit-warning that traders said was already largely priced in.