Adidas profit margin hits record as pricey footwear flies

Germany's Adidas posted its highest-ever gross profit margin as the sale of higher-priced products through its own stores and a new running shoe helped offset weak consumer spending in Europe and problems at Reebok.

Despite a 2 per cent fall in sales in the first quarter, with fewer big sporting events than the year before, operating profit at the world’s second-largest sports apparel maker behind Nike rose by a greater-than-expected 8 per cent to €442 million.

The group said its new Boost running shoes, priced at about €115 a pair, had almost completely sold out in several countries in the first four weeks of sales and that it was struggling to keep up with demand.

"Unfortunately we don't have enough supply at the moment," chief executive Herbert Hainer told analysts yesterday.

He said partner BASF, the chemical company that developed the shoe's cushioning foam, would increase production during the year, enabling Adidas to put more of the shoes into shops and launch a similar basketball shoe.

Adidas is hoping Boost will help it gain more customers in the United States, the world’s biggest footwear market.

The higher profits overshadowed a slight cut in the sales growth forecast for its Reebok-CCM division. – Reuters