Aug 7, 2008
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Adidas plays down short-term benefits of Olympics

Aug 7, 2008

By Michael Wei

BEIJING (Reuters) - Adidas AG, the world's No. 2 sports goods maker, on Thursday played down the short-term business benefits of the Olympic Games but said China would become its second-largest market by the end of the year.

Adidas posted forecast-beating results on Tuesday for the latest quarter, bolstered by the Euro 2008 soccer championship.

But Adidas Chairman and Chief Executive Herbert Hainer said the Beijing Games, which open on Friday, would be different.

"The European championship immediately gives you revenues from the balls, from the boots, et cetera, whereas the Olympic Games gives you more or less a mid- and long-term perception and loyalty to the brand by the consumer," Hainer told reporters.

Adidas is the official sportswear partner of the Games and official partner of the Chinese Olympic Committee.

Hainer said the company expected to record $1 billion in sales in China this year and restated its goal of reaching 1 billion euros ($1.55 billion) in revenue by 2010.

Adidas's sales in China jumped 60 percent in the first six months from a year earlier, leaving China on course to become its second-largest market by the end of this year, Hainer said.

The group's expansion would be driven not just by the Adidas brand but also by Reebok, which Adidas bought in 2005.

"We will open approximately 1,000 Reebok stores here by the end of 2010, and this will definitely fuel our growth," Hainer said. Currently there are about 800 Reebok outlets in China.

Adidas said earlier this year that it expected to increase the number of its own-name stores in China to 6,300 by 2010 from over 4,000 now.

Hainer said Adidas would keep investing in China, but the proportion of shoes made there would drop slightly "from over 50 percent to around 50 percent" as the firm expanded production in Cambodia, Vietnam and eastern Europe.

A number of multinational companies are shifting some production out of China, mainly due to rising labor costs, but Hainer said Adidas had no plan to shut any factories in China.

($=6.85 yuan)

(Reporting by Michael Wei; Editing by Alan Wheatley)

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