Adidas today reported a 17% rise in first quarter net profit, helped by high-margin ecommerce.
This was despite overall sales growth slowing due to supply chain issues in the North American market, as well as a decline in Europe.
Chief executive Kasper Rorsted has put a big focus on improving profitability at Adidas since he took over in 2016, by focusing on growing in North America and Asia and pushing ecommerce, where margins are higher than in stores.
In the first quarter, Adidas said its operating margin rose 1.4 percentage points to 14.9%.
This pulled it ahead of bigger rival Nike, which recorded an operating margin of 13.5% for the December to February period.
Adidas said profitability had been helped by lower sourcing and marketing costs, favourable currency developments as well as selling more higher priced products and the expansion of online, with ecommerce sales up 40% in the quarter.
First-quarter sales rose by a currency-adjusted 4% to €5.883 billion, while attributable net profit came in at €632m, beating analyst consensus for €5.8 billion and €567m respectively.
Adidas warned in March that it expects supply chain issues to curb sales growth in the first half of the year, particularly in North America, where it has doubled its business in the last three years to take market share from Nike.
Sales in Europe fell 3% in the quarter, while they grew 16% in China.
The company reiterated it expects sales growth of just 3-4% in the first half of the year, speeding up in the second half as it ramps up supplies by reallocating factory capacity and prioritising the US market.
Meanwhile, smaller rivals are powering ahead - Puma posted a record quarter last week, with currency-adjusted sales up 15.3%, while Under Armour raised its full-year earnings forecast yesterday.