Adidas first-quarter net income jumps but Reebok weak

FRANKFURT (Reuters) - Cost cuts helped German sports goods maker Adidas's <ADSG.DE> first-quarter net income rise by nearly a third but its Reebok brand continued to suffer because of weak prospects in the United States.

Adidas, the world's second biggest sports goods maker after Nike <NKE.N>, said on Tuesday that net income rose 32 percent to 169 million euros ($261.1 million) and sales climbed 3 percent on a currency-adjusted basis to 2.621 billion euros.

Thirteen analysts in a Reuters poll had forecast, on average, net income of 157 million euros and sales of 2.624 billion.

Its shares rose 3.2 percent to 41.70 euros soon after the market opened, making them the leading gainer in Germany's blue-chip DAX index <.GDAXI>, which was down 0.2 percent.

The Adidas brand order backlog -- a key indicator of future sales for retailers -- was up 13 percent at the end of the quarter on a currency-adjusted basis, thanks to the Beijing Olympics and Euro 2008 soccer championship.

But Reebok's order backlog was down 13 percent year on year at the end of the quarter. It was down 8 percent at the end of 2007.

Adidas bought Reebok in 2006 to complement its strength in classic sportswear such as soccer boots and to step up its fight against Nike.

A crisis at U.S. sports retailer Footlocker <FL.N> has hurt sports retailers such as Adidas, Puma <PUMG.DE> and Nike. In the fourth quarter of last year, Footlocker shut stores, cancelled existing orders and issued no new orders.

Herzogenaurach-based Adidas, known for its three stripes logo, reiterated that it expects sales to rise by a high single-digit percentage this year and net income to grow at least 15 percent above 2007's 551 million euros.

"A summer of excitement is ahead of us," Adidas Chief Executive Herbert Hainer said. "Despite a challenging market environment, we are optimistic we will achieve all our targets."

Adidas said it expects backlogs at Reebok to improve over the course of the year as it betters its product mix and launches a new brand campaign.

Nike said in March that sales jumped 16 percent in the quarter ended in February. But its U.S. order backlog grew only 1 percent as it has been controlling inventory there as athletic shoe retailers lure cash-strapped consumers.

Adidas shares trade at about 10 times 2009 earnings, at a discount to Nike's 15 times fiscal 2009 earnings. Some analysts say Adidas shares are bound to rise as the negative sentiment on Reebok clears and the company benefits from its relatively attractive global exposure.

(Reporting by Rajiv Sekhri)