Every Monday we feature “A Stock to Sell” as our daily post. With every stock we recommend as a sell, we give you a full explanation of why we advise against investing in the stock at this time.
Adidas AG (ADR) (symbol ADDYY on the U.S. over-the-counter market; www.adidas.com) together with its subsidiaries, develops, makes and markets athletic equipment and clothing worldwide.
The company operates through six segments: Wholesale, Retail, TaylorMade-Adidas Golf Company, Rockport, Reebok-CCM Hockey and Other Centrally Managed Brands.
Adidas was founded in 1920 and is headquartered in Herzogenaurach, Germany. It was known as Adidas-Salomon AG until 2006, when it shortened its name to Adidas AG. Its main listing is on the Frankfurt Stock Exchange.
The stock, which was as high as $50 in July, took a big drop at the beginning of August 2014, and fell to as low as $34. The decline came after the company cut its sales and profit forecast for this year, citing the risk of falling sales in Russia due to mounting tensions with the West over Ukraine. The shares have since recovered to about $40.
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Stock market advice: Activist investors show interest in buying a stake in Adidas
The company now expects a profit of about 650 million euros ($870 million U.S., or $2.08 per ADR) this year, down from its previous estimate of 830 million to 930 million euros. Adidas also estimates that its sales will grow at a “mid- to high-single-digit” rate, down from a “high-single-digit” rate.
Adidas earns a significant amount of its revenue in Russia. Moreover, it had planned to add more Adidas and Reebok stores in the country ahead of the 2018 FIFA World Cup, which is slated to take place there.
Adidas operates in a highly competitive market. For the first time, the company has now dropped to the No. 3 spot among sportswear brands in the U.S., behind major rivals Nike and Under Armour. Adidas will boost its marketing spending to regain market share, but whether—and how soon—that will be effective is uncertain.
Meanwhile, a group of activist investors and hedge funds are reportedly looking at buying a stake in the company to press its management to make sweeping changes. These moves could include removing CEO Herbert Hainer and setting up fitness brand Reebok and golf label TaylorMade as separate firms.
We don’t recommend Adidas AG’s ADRs. If you own the shares, we think you should sell.
Tomorrow we tell you about the rising profits of one of Canada’s retail icons.
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The Successful Investor Inc. and its affiliate Successful Investor Wealth Management (referred to hereafter as TSI Network) know that you care how information about you is used and shared, and we appreciate your trust that we will do so carefully and sensibly. This notice describes our privacy policy. By visiting websites owned by or associated with TSI Network, you are accepting the practices described in this Privacy Policy.
This privacy policy is applicable to all TSI Network Visitors, Clients, Employees, Suppliers, Web sites, Management, and all other interested parties. Any links to or from our site are not covered by this policy. We encourage you to read the privacy policies of every site that you visit.
The privacy of the site/store visitor is very important to TSI Network, and is respected at all times. The information we receive from customers helps us to personalize and continually improve your online experience at TSI Network.
We do not collect or disclose personal information, except when it is provided to us voluntarily by the site/store visitor with their consent.
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What personal information do we collect?
The information we receive from customers helps us personalize and continually improve your online experience at TSI Network. TSI Network may collect personal information online for all legal purposes, which include, but are not limited to:
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Changes to this Policy
This Policy is the sole authorized statement of TSI Network's practices with respect to the collection of personal information through TSI Network's websites and the subsequent use and disclosure of such information. Any summaries of this Policy generated by third party software or otherwise (for example, in connection with the "Platform for Privacy Preferences" or "P3P") shall have no legal effect, are in no way binding upon TSI Network, shall not be relied upon in substitute for this Policy, and neither supersede nor modify this Policy.
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The contents of this web site and our publications are based upon sources of information believed to be reliable, but no warranty or representation, expressed or implied, is given as to their accuracy or completeness. Any opinion reflects the Successful Investor’s judgment at the date of publication and neither the Successful Investor, nor any of its affiliated companies, nor any of their officers, directors or employees, accepts any responsibility in respect of the information or recommendations contained in the publications or on this web site. Moreover, the information or recommendations are subject to change without notice.
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Every Monday we feature “A Stock to Sell” as our daily post. With every stock we recommend as a sell, we give you a full explanation of why we advise against investing in the stock at this time.
