euro adhoc: adidas AG / Financial Figures/Balance Sheet / Currency-neutral Group sales grow 11% in the third quarter and year-to-date/Q3 earnings per share increase 6%, nine months earnings per share

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9-month report

06.11.2008

Third quarter adidas Group currency-neutral sales grow 11% During the
third quarter of 2008, Group revenues grew 11% on a currency-neutral
basis, driven by double-digit sales growth in the adidas and
TaylorMade-adidas Golf segments. While adidas revenues increased 15%,
TaylorMade-adidas Golf sales grew 12% on a currency-neutral basis.
Revenues in the Reebok segment declined 1%. Currency movements
negatively impacted Group sales in euro terms. Group revenues grew 5%
in euro terms to EUR 3.083 billion in the third quarter of 2008 from
EUR 2.941 billion in 2007.

Third quarter EPS increases 6% The Group´s gross margin increased 0.4
percentage points to 49.0% (2007: 48.6%) in the third quarter as a
result of an improving regional mix, further own-retail expansion and
favorable currency movements. These effects more than offset higher
sourcing costs. Group gross profit increased 6% to EUR 1.511 billion
(2007: EUR 1.429 billion). The Group´s operating margin decreased 0.7
percentage points to 15.3% in the third quarter of 2008 versus 16.0%
in the prior year as a result of higher operating expenses as a
percentage of sales. Operating profit, however, increased slightly to
EUR 473 million versus EUR 471 million in 2007. The Group´s net
income attributable to shareholders grew 2% to EUR 302 million (2007:
EUR 298 million), supported by a lower tax rate. As a result of the
lower weighted average number of shares due to the share buyback
program, earnings per share increased at a stronger rate. Basic EPS
for the third quarter grew 6% to EUR 1.54.

adidas Group currency-neutral sales grow 11% in the first nine months
of 2008 During the first nine months of the year, Group revenues
increased 11% on a currency-neutral basis, driven by double-digit
sales growth in the adidas and TaylorMade-adidas Golf segments. The
adidas segment grew 16%, the Reebok segment decreased 2% and
TaylorMade-adidas Golf segment sales increased 11%. Currency
movements negatively impacted Group sales in euro terms. Group
revenues grew 4% in euro terms to EUR 8.225 billion in the first nine
months of 2008 from EUR 7.879 billion in 2007.

"We have again delivered a strong set of financial results. Momentum
in the adidas and TaylorMade-adidas Golf segments has clearly
continued," commented adidas Group CEO and Chairman Herbert Hainer.
"And this is despite mounting pressure on retail markets and consumer
spending around the globe."

Sales increase strongly in nearly all regions During the first nine
months of the year, adidas Group sales grew at double-digit rates in
all regions except North America where revenues declined. Group sales
in Europe grew 13% on a currency-neutral basis in the first nine
months of 2008 as a result of strong increases in most countries. In
North America, Group revenues declined by 7% on a currency-neutral
basis due to lower sales in the USA. Sales for the Group in Asia
increased 23% on a currency-neutral basis in the first nine months of
2008, driven by particularly strong growth in China. In Latin
America, currency-neutral sales grew 39% in the first nine months of
the year, with double-digit increases coming from all of the region´s
major markets. This development was also supported by the first-time
consolidation of Reebok´s joint ventures in the region. Currency
translation effects negatively impacted sales in euro terms in all
regions. Sales in Europe increased 9% in euro terms to EUR 3.776
billion in 2008 from EUR 3.455 billion in 2007. Revenues in North
America decreased 17% to EUR 1.871 billion in 2008 from EUR 2.248
billion in the prior year. In euro terms, revenues in Asia grew 16%
to EUR 1.875 billion in 2008 from EUR 1.616 billion in 2007. Sales in
Latin America grew 34% to EUR 647 million in 2008 from EUR 484
million in the prior year.

Record Group gross margin The Group gross margin increased by 1.7
percentage points to 49.4% during the first nine months of 2008
(2007: 47.7%), driven by improvements in the adidas and
TaylorMade-adidas Golf segments. This highest-ever first nine months
rate was related to an improving regional and product mix, increased
own-retail activities as well as favorable currency movements. Cost
synergies resulting from the Reebok integration into the adidas Group
also continued to have a positive impact. Input price increases had
only a modest negative impact on the cost of sales development in the
first nine months of 2008. As a result of the Group´s strong top-line
growth and gross margin improvement, gross profit for the adidas
Group rose 8% in the first nine months of 2008 to reach EUR 4.062
billion versus EUR 3.755 billion in the prior year.

Operating margin improves by 0.4 percentage points The Group´s
operating margin grew 0.4 percentage points to 11.7% in the first
nine months of 2008 (2007: 11.3%) as the increase in gross margin
more than offset higher operating expenses as a percentage of sales.
Operating expenses as a percentage of sales increased by 1.2
percentage points to 38.5% in the first nine months of 2008 from
37.3% in 2007. This development was primarily driven by higher
marketing expenses as a percentage of sales in the adidas segment
related to this year´s major sporting events. Increased expenses to
support the Group´s growth in emerging markets such as Russia also
impacted this development. Operating profit for the Group increased
8% in the first nine months of 2008 to reach EUR 963 million versus
EUR 889 million in 2007.

Net financial expenses increase 9% Net financial expenses increased
9% to EUR 113 million in the first nine months of 2008 from EUR 104
million in the prior year. The increase was primarily due to exchange
rate variances. Lower financial income also contributed to this
development.

Income before taxes increases by 8% Despite higher net financial
expenses, income before taxes as a percentage of sales increased by
0.4 percentage points to 10.3% in 2008 from 10.0% in 2007 as a result
of the Group´s operating margin increase. Income before taxes for the
adidas Group grew 8% to EUR 850 million in the first nine months of
2008 from EUR 785 million in 2007.

Net income attributable to shareholders up 11% The Group´s net income
attributable to shareholders increased 11% to EUR 588 million in the
first nine months of 2008 from EUR 530 million in 2007. This
development was supported by a lower tax rate and lower minority
interests. The Group´s tax rate decreased by 1.5 percentage points to
30.5% in the first nine months of 2008 (2007: 32.0%). The Group´s
minority interests declined by 31% to EUR 2 million in the first nine
months of 2008 from EUR 4 million in the prior year.

Basic earnings per share increase 14% Basic earnings per share
increased 14% to EUR 2.96 in the first nine months of 2008 versus EUR
2.60 in the prior year. The weighted average number of shares used in
the calculation of basic earnings per share was 198,868,061 (2007
average: 203,583,762). Diluted earnings per share in 2008 increased
13% to EUR 2.78 from EUR 2.46 in the prior year. The weighted average
number of shares used in the calculation of diluted earnings per
share was 214,671,394 (2007 average: 219,456,361).

Share buyback program completed Under the share buyback program
announced on January 29, 2008, adidas AG purchased 2,705,313 shares
at an average price of EUR 38.20 during the third quarter. The
buyback volume amounted to EUR 103 million in the third quarter. The
buyback program was continued in the fourth quarter. On October 27,
2008, adidas AG announced the completion of the program. Between
January 30 and October 22, 2008, adidas AG repurchased a total of
10,182,248 shares at an average price of EUR 40.21. This represents
5% of the stock capital at the time the program started. The total
buyback volume amounted to EUR 409 million.

Working capital development supports further growth Group inventories
grew 14% to EUR 1.812 billion at the end of the first nine months of
2008 versus EUR 1.596 billion in 2007. On a currency-neutral basis,
this represents an increase of 15%. This development is due to
business expansion in emerging markets and the inventories related to
the new Reebok joint ventures in Latin America. Receivables for the
Group increased 7% to EUR 2.055 billion at the end of the first nine
months of 2008 versus EUR 1.918 billion in the prior year. On a
currency-neutral basis, receivables increased 9%, which is below
sales growth for the third quarter. This reflects ongoing strict
discipline in the Group´s trade terms management and concerted
collection efforts in all segments.

Net borrowings increase by EUR 392 million Net borrowings at
September 30, 2008 were EUR 2.593 billion, up 18% or EUR 392 million
versus EUR 2.201 billion in the prior year. The positive impact of
the Group´s strong bottom-line profitability was more than offset by
the share buyback, investments in controlled space, other capital
expenditure and operating working capital needs.

adidas backlogs grow 4% on a currency-neutral basis Backlogs for the
adidas brand at the end of the third quarter increased 4% versus the
prior year on a currency-neutral basis. The non-recurrence of prior
year orders for UEFA EURO 2008™ related product had a negative impact
on football backlogs. The overall improvement, however, was supported
by increases in many other major categories. In euro terms, adidas
backlogs also grew 4%. Footwear orders increased 6% in
currency-neutral terms (+6% in euros) with growth coming from all
regions. Apparel backlogs grew 1% on a currency-neutral basis (+1% in
euros), driven by growth in Asia which more than compensated declines
in Europe and North America.

Reebok backlogs decline Currency-neutral Reebok backlogs at the end
of the third quarter of 2008 decreased 13% versus the prior year on a
currency-neutral basis. In euro terms, this also represents a decline
of 13%. Footwear backlogs decreased 10% in currency-neutral terms
(-10% in euros). Apparel backlogs declined by 23% on a
currency-neutral basis (-24% in euros). These developments largely
reflect challenging market conditions in Reebok´s major markets. Due
to the exclusion of the own-retail business and the high share of
at-once business in Reebok´s sales mix, order backlogs in this
segment are not indicative of the expected 2008 sales development.

Group 2008 and 2009 outlook adidas AG today confirms the Group
financial guidance it has previously communicated for 2008. adidas
Group sales in 2008 are expected to grow at a high-single-digit rate
on a currency-neutral basis. Brand adidas sales are forecasted to
increase at a low-double-digit currency-neutral rate. Sales guidance
has changed for the Reebok and TaylorMade-adidas Golf segments.
Currency-neutral Reebok segment sales are now forecasted to remain
stable compared to the prior year (previously mid- to
high-single-digit increase). Currency-neutral TaylorMade-adidas Golf
sales are now forecasted to increase at a high-single-digit rate
(previously mid-single-digit rate). Full year Group gross margin is
expected to exceed 48.0%. The Group operating margin is expected to
approach 10.0% in 2008. Full year net income attributable to
shareholders is projected to grow by at least 15% in 2008 versus the
2007 level of EUR 551 million. This will represent the eighth
consecutive year of double-digit net income growth for the Group.

Based on current order intake and retailer feedback, Management plans
to grow sales and net income again in 2009. However, as a result of
the uncertain global macroeconomic environment and the potential
impact on the Group´s financial results, Management currently lacks
sufficient visibility on the Group´s business development in the
coming year. Therefore, the adidas Group has decided to retract its
financial guidance for 2009. It is planned to provide a 2009 outlook
with the presentation of the Group´s 2008 full year results in March
next year.

Herbert Hainer stated: "We are on a good path to reaching all of our
financial targets for 2008. However, the current state of the world
economy means we have challenges in front of us that require all our
energy and focus. But we are not sitting back and just waiting to
react. We are pro-actively looking at ways to ensure we drive healthy
top- and bottom-line growth again in 2009. This will be achieved
through tight cost control but also continued investments in our core
business segments."

end of announcement euro adhoc
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ots Originaltext: adidas AG
Im Internet recherchierbar: http://www.presseportal.de

Further inquiry note:

Dennis Weber

Investor Relations Manager

Tel.: +49 (0)9132 84 4989

E-Mail: dennis.weber@adidas-Group.com

Branche: Recreational & Sports goods
ISIN: DE0005003404
WKN: 500340
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