Shares of adidas (ADDYY) are on the rise after the company announced that it will initiate a share buyback program following its updated long-term outlook. RESULTS, OUTLOOK: adidas’ revenue jumped 12% in the fourth quarter, led by China and North America and helped by a growing popularity of its retro sneakers. For its two brands, adidas and Reebok, constant-currency sales surged 27% in North America last year as adidas in particular took market share from Nike (NKE). “2017 was a strong year — financially and operationally. We made great progress toward achieving our mission to be the best sports company in the world. Our strategic growth areas — North America, Greater China and Digital Commerce — were the main drivers of our performance,” adidas CEO Kasper Rorsted said. The German sportswear group also added that it expects net profits will rise faster over the next three years than previously target. adidas now sees an annual increase in post-tax income of 22%-24%, up from 20%-22%, and operating margin to rise to 11.5% by 2020. The company also confirmed an earlier revenue growth target of 10%-12%. SHARE BUYBACK PROGRAM: adidas’ board has decided to launch a multi-year share buyback program of up to EUR3B in total until May 11, 2021. Starting on March 22, adidas plans to buy back shares worth up to EUR1B in 2018. The new buyback program is in addition to the company’s stated policy to pay an annual dividend to shareholders in the range of 30%-50% of net income from continuing operations. The program will be executed by buying back shares via the stock exchange. The vast majority of the share buyback program will be financed through the company’s net cash position as well as the expected “strong” operating cash flow generation in the years ahead, Adidas said in a statement. At the same time, the company “intends to make use of available attractive conditions for debt financing on the capital markets in order to finance the share buyback program.” PRICE ACTION: In afternoon trading, shares of adidas trading in New York have jumped about 9% to $116.18.
previous post