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Adidas disappoints investors

August 7, 2014

Adidas may have won the World Cup, but it is losing in the eyes of investors. The company has announced a disappointing first-half finish amid great expectations.

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Adidas soccer shoe and soccer ball
Image: Daniel Mueller/Greenpeace

Shares in the world's No. 2 sports gear maker plummeted 4.4 percent to 55.52 euros ($74.25) in the second quarter, a low not seen since July 2012, Adidas said Thursday.

Earnings from North America and Asia in the first half of the year fell far short of analysts' expectations, weighed down by huge advertising costs during the 2014 FIFA World Cup and slumping demand for golf equipment in the US.

Despite sponsoring the winning team in the most-watched sports event in the world, sales have barely risen and profits slumped in the second quarter, according to Adidas Group CEO Herbert Hainer.

The Herzogenaurach, Germany-based company was able to cash in on its sponsorships and fan jerseys during the World Cup, but it said rising production and marketing costs and reduced demand for golf equipment in the US offset those gains.

Adidas has been battling Nike for the North American market, where its sales have dropped 14 percent. In Asia, excluding China, business declined by 7 percent, Adidas said.

In all, net revenue in the first half of the year sank 2 percent to nearly 7 billion euros, despite booming sales in Russia and other eastern European countries.

Second-quarter earnings were also dragged down by a decline in the ruble's value amid the Russian-Ukrainian crisis. The company admitted to underestimating the situation affecting both countries.

el/cjc (Reuters, dpa)