Adidas sales top forecasts, raises 2011 outlook

* 2010 sales 11.99 bln euros vs Rtrs poll avg 11.67 bln
* Op profit 894 million euros vs poll avg 893 million
* Rising raw material costs to keep margins flat in 2011
* Sees 2011 sales rising mid-high single digit rate
* Shares gain 3.1 percent in weaker market

HERZOGENAURACH, Germany, March 2 - Adidas AG posted record sales and raised its 2011 sales goal on Wednesday as consumer confidence improves and its three-stripes logo lures buyers in emerging markets such as China.

Shares in the world's second largest sporting goods company after Nike Inc rose 3.1 percent to 47.95 euros by 1154 GMT as the sales outlook impressed, outperforming Germany's benchmark DAX index which was down 0.9 percent.

"2011 is shaping up to be another great year for the Adidas group and we are off to a fast start," Chief Executive Herbert Hainer said after the group reported yearly sales of 11.99 billion euros ($16.7 billion), topping forecasts which averaged 11.67 billion.

Hainer, whose favourite sports are soccer and golf, told reporters he expected double-digit growth in China in 2011.

The German company is aiming to increase margins to 11 percent by 2015 but in the shorter term it said higher raw material costs would offset the benefit from improved margins from its network of own stores, meaning group gross margins would remain flat in 2011 at between 7.5 and 8.0 percent.

"If input costs continue to rise at such a pace, then the challenge will undoubtedly intensify and lead to further margin pressure for our industry beyond 2011," Hainer said.

Chief Financial Officer Robin Stalker told journalists the group had "tremendous confidence" it could meet the 2015 target thanks to its ability to implement price rises.

POSITIVE REACTION

High commodities prices are affecting companies from consumer goods groups such as Henkel AG to clothing manufacturers and chemicals firms such as AB Foods Plc and BASF AG.

Adidas, based in the same southern German town as arch-rival Puma AG, said it expected mid-to-high single digit growth in sales in 2011, improving on its previous guidance for a growth rate in the mid single digits.

"We expect a positive share price reaction in the short term, because competitor Puma had given a comparatively poor earnings guidance," DZ Bank analyst Herbert Sturm said.

As part of a strategy to grow faster than the market over the period to 2015, Adidas is concentrating on North American high-school kids, as well as Russia and China.

To attract teenagers it is running advertising campaigns with basketball stars such as Dwight Howard and Derrick Rose. A Facebook page for its Originals brand now also has 7.1 million followers, Hainer said.

Adidas said it would open 100 new stores this year, most of them in emerging markets, and would extend the Originals brand with a new denim line.

Adidas struggled with excess inventory in China at the start of last year but returned to growth in the second half, with six-month sales up 10 percent.

Adidas also more than doubled its dividend to 0.80 euros per share for 2010 as it reported sales up 9 percent on a currency-neutral basis and operating profit of 894 million euros.

Analysts had been expecting 2010 operating profit of 893 million euros and a dividend of 0.64 euros according to a Reuters poll.

It maintained a forecast for 2011 earnings per share to rise by 10 to 15 percent, setting a target of between 2.98 euros and 3.12 euros. (Additional reporting by Josie Cox; Editing by Jon Loades-Carter and David Holmes)

source:Reuters