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Adidas cuts 2012 sales forecast on Reebok woes

Sport shoes are displayed in a store in the northern German town of Hamburg August 3, 2005.
Sport shoes are displayed in a store in the northern German town of Hamburg August 3, 2005.

By Victoria Bryan

FRANKFURT (Reuters) - German group Adidas has trimmed its 2012 sales forecast amid a continuing sales slump at Reebok, whose sales have fallen sharply for a second quarter.

The world's second-largest sportswear group after U.S. rival Nike said on Thursday it now expected 2012 sales to rise by a high single-digit percent, compared with a previous forecast for a rise of almost 10 percent.

Adidas also reported third-quarter operating profit of 494 million euros ($630 million) and sales up 4 percent to 4.17 billion euros, in line with expectations for 490 million and 4.16 billion.

Reebok has had a torrid year in which its toning shoes fell out of favor, it discovered fraud at an Indian unit, and lost a major American football contract.

In addition, the group is now being hurt by a lockout by U.S. hockey players threatening to wipe out the entire season.

Adidas has annual sales of around 100 million euros from hockey in North America.

Adidas has performed better than rivals Nike and Puma this year, taking market share in hotly contested countries such as China.

The one black mark on its record has been Reebok, whose sales fell 25 percent in the third quarter, following a 26 percent fall in the second quarter.

Adidas shares, up nearly a third in value this year, were down 3.2 percent by 1010 GMT, the biggest faller on the DAX index of leading German companies <.GDAXI>.

"Adidas has lowered sales forecasts. Investors do not like to hear that," said one trader.

The downgrade was unusual for Adidas, which raised its 2011 sales outlook four times over the course of that year.

"Most shareholders continue to show a profit on their Adidas holdings. With minor disappointment at Reebok, some trimming of holdings is understandable," Silvia Quandt analyst Mark Josefson said, maintaining a 'buy' rating on the stock.

Even when cutting its 2015 forecast for Reebok in September 2012 by a third to 2 billion euros, Adidas kept its overall 2015 group target of 17 billion euros thanks to its Adidas brand and TaylorMade Golf division.

On Thursday, it maintained a target for 2012 net earnings to rise 15-17 percent to 700-785 million euros. Profit has been growing faster than sales, helped by higher margins in emerging markets and through its own stores.

Analysts expected the group to report 2012 net earnings up 21 percent, a Reuters poll found.

The 2012 sales outlook overshadowed comment on 2013, when it expects earnings to rise over 10 percent and an operating margin of around 9 percent, up from around 8 percent this year.

"We will see record sales and earnings in 2013," chief executive Herbert Hainer said in a video on the group's website. "All that I hear from the markets is that we are winning market share in each and every country."

Hainer also predicted a return to sales growth for Reebok in 2013 and said he was seeing the first signs of success with its Classics and children's ranges. ($1 = 0.7840 euro) ($1 = 0.7840 euros) (Additional reporting by Daniela Pegna; Editing by Dan Lalor and Mark Potter)

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