The sportswear retailer has become the latest houshold name to fall foul of the current economic climate.
Adidas, the world’s second largest sportswear retailer, has today announced an astounding 97% drop in pre-tax profits for the first quarter of 2009.
The German sportswear giant - who also own Reebok and the TaylorMade golfwear brand - saw pre-tax profit fall to just €5million (approx.£4.4million) in the first three months of the year, down from the €169million they made during the same period in 2008.
On announcing the profits-warning Chairman and Group Chief Executive Herbert Hainer cited the growing cost of wages and raw materials coupled with a weaker dollar to euro conversion and falling sales across the globe as driving factors behind the company’s significant drop in net profits. The company’s takeover of Reebok in 2006 is also believed to have contributed to its current financial strain.
Adidas have seen sales in North America plunge 17% in the last year, with European sales also falling by 5% and sales in Asia dropping by 6% too.
The company, which currently sponsor famed-footballer David Beckham, are now expected to close a number of stores and regional offices in their efforts to enhance profitability.
“We are now in a position to make a game-changing structural refinement to our business said Herbert Hainer.
"The current economic climate adds urgency to accelerate our plans.
"Our results have been materially affected by higher input prices, currency devaluation effects and restructuring costs.
"Although some of these items will recur again as we go through the balance of the year, I am convinced we will put most of these effects behind us in the current year."
