Adidas, the world's second largest maker of sporting goods, cut its 2013 profit forecast late yesterday. Its shares slumped almost 6% in trade today as a result.
The strength of the euro, a glitch in a new Russian distribution site and weakness in the global golf market caused Adidas to reduce the low end of its profit forecast by 7.9% after markets closed yesterday.
The extent of the cut surprised analysts, some of whom had trimmed estimates by about 3% earlier this week to reflect currency movements.
Net income this year will be €820-850m, Germany-based Adidas said in a statement. The company had previously forecast net income of €890-920m.
Adidas also cut its operating margin forecast to about 8.5% from a previous forecast of 9%.
While the sporting-goods maker faces "increased headwinds, momentum will clearly return to our business in the fourth quarter and beyond," chief executive Officer Herbert Hainer said in the statement.
Adidas, which makes almost 73% of its revenue outside Western Europe, joins European companies such as Puma and Prada that have also suffered from the strength of the euro. The currency has gained about 5% this year
Adidas also further pared its sales forecast for the year, saying revenue will rise at a "low-single-digit" pace. The company said in August that it expected sales to rise at a "low- to mid-single-digit rate," after previously forecasting "mid-single-digit" percentage growth, because of unfavorable currency movements.
Adidas said it will not attain its goals in Russia because of the country's currency weakness combined with an "unexpected short-term distribution constraint" as a result of the transition to its new distribution facility in Chekhov. It expects a resolution at the beginning of the fourth quarter.
Adidas also cited weakness in the global golf market yesterday, saying it will lead to a lower sales and profit contribution from the segment than originally forecast.