Adidas sees profits drop by 97%

Sales of Adidas gear fell 6% this winter when compared with last winter.

Sportswear giant Adidas has reported a 97% fall in profits during the January to March quarter after sales were hit in the economic downturn.

Adidas made 5m euros ($6.7m; £4.4m) in pre-tax profits during the first quarter, down from 169m euros in 2008.

Sales were down 6% on a year ago, and the company said it was facing higher raw material and wage costs. Shares in Adidas fell 10% in Frankfurt.

The firm also said it will close some offices and might shut some stores.

Adidas is to close some regional offices in Europe and Asia as it aims to save more than 100m euros per year.

It will also carry out a review of under-performing retail stores.

'Urgent restructuring'

"We are now in a position to make a game-changing structural refinement to our business," said Herbert Hainer, group chief executive and chairman.

"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."

Adidas is the world's second-biggest sporting goods maker after Nike.

The German firm bought Reebok in 2006 to help it compete against Nike, but Reebok still struggles, particularly in North America where Adidas saw its sales fall by 14% in 2008.

In January Adidas announced it would close its Reebok office in Bolton, ending a 116-year association with the town.

Rival Nike has also been hit by falling consumer demand. In March it said it planned to halt production at three shoe factories in China and one in Vietnam.