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World Cup fuels 20% surge in Adidas Q2 net profit

Adidas AG posted a jump in profit for the second quarter, with the FIFA World Cup soccer tournament helping to boost sales worldwide.

For the three months ended June 30, the German sportswear maker reported net income from continuing operations of €418 million, surging 20% year over year from €347 million and beating the S&P Global Market Intelligence consensus estimate of €384.2 million.

Diluted EPS from continuing operations came in at €2.05, up from €1.70 in the year-ago period and ahead of the S&P Global Market Intelligence consensus estimate for normalized EPS of €1.90.

"We delivered another strong quarter on the back of a successful World Cup activation," Adidas CEO Kasper Rorsted said in a statement. "Our profitable growth was once again driven by our strategic focus areas North America, Greater China and e-commerce, while we continued to invest into the desirability of our brands and the scalability of our business."

Net sales came in at €5.26 billion, up 4% from €5.04 billion a year prior and a 10% increase in currency-neutral terms. The Adidas brand saw overall net sales rise 6% to €4.77 billion from €4.50 billion, driven by the sport performance category. The brand also sold team jerseys, shoes and soccer balls for the World Cup. However, sales for the Reebok brand dropped 10% to €387 million from €431 million on weak performances in the training and running categories.

Meanwhile, the combined sales of the Adidas and Reebok brands recorded growth of 16% in North America, 15% in Latin America, 14% in Russia and the Commonwealth of Independent States, and 19% in the Asia-Pacific. Within that region, Greater China contributed a 27% increase. E-commerce revenue rose 26% for the quarter.

The athletic apparel and footwear maker had 2,430 stores as of the end of the quarter, down from 2,658 stores in the year-ago period.

Adidas also disclosed that it was taking an impairment charge "in the mid-triple-digit million euro range" related to the Reebok trademark after the German Financial Reporting Enforcement Panel took issue with its historical book value. But the company did not expect that to have an impact on its 2018 income and cash flow statement, or short- and long-term guidance.

In addition, Adidas confirmed its full-year guidance, expecting sales to grow at nearly 10% on a currency-neutral basis and projecting net income from continuing operations to increase to a range between €1.62 billion and €1.68 billion.