Adidas will shut down regional offices in Europe and Asia to help save €100 million after mounting costs and more troubles at its Reebok brand caused first-quarter earnings to miss expectations.
The world's second-biggest sporting goods maker after Nike could also close underperforming retail stores, it said today.
Adidas shares fell more than 10 per cent after the announcement and were down 9.6 per cent at €26.68 by 8.25am, making them the worst performer on Germany's blue-chip index, which was 0.7 per cent lower.
The company's first-quarter operating profit fell nearly 80 per cent to €58 million, hurt by higher costs in emerging markets and rising restructuring costs at US brand Reebok, and missing the €179 million average of analyst forecasts in a Reuters poll.
The operating margin narrowed to 2.2 per cent from 10.8 per cent a year earlier.
Adidas bought Reebok in 2006 to boost its position in classic sportswear and help it better compete against Nike. But Reebok still struggles, particularly in North America, where Adidas suffered a 14 per cent drop in 2008 net sales.
"We believe our estimates and consensus for the full year 2009 will need some revision to reflect the first-quarter results picture and the company's own expectations for the first half," Standard & Poor's analyst Alessandra Coppola said.
Adidas said it saw full-year 2009 earnings per share around break-even in the first half of the year and in the second half, earnings would turn significantly positive, although remaining lower than a year earlier.
In light of crumbling consumer demand, US bellwether Nike said in March it planned to halt production at three shoe factories in China and one in Vietnam.
Overall, Adidas said 2009 margins, net income and earnings per share (EPS) would decline due to higher operating costs. Group sales would drop at up to mid-single-digit rates.
First-quarter sales eased to €2.58 billion, slightly better than the average forecast of €2.54 billion in the Reuters poll.
Adidas' German home market is facing its most severe recession since World War Two, with the government forecasting a 6 per cent contraction this year. Retail sales there fell a more-than-expected 1.5 per cent in March.
Germany's Metro, the world's fourth-largest retailer, predicted a sales slowdown this year after what it hailed as the worst slump since the Great Depression halved profit in the first quarter.
Adidas shares trade at about 11 times 12-month forward earnings, according to Thomson Reuters StarMine, which weighs analysts' forecasts according to their track record.
Reuters