For Q2, revenues for Adidas brand increased 12 per cent. While revenues in the wholesale channel increased at a high-single-digit rate, direct-to-consumer sales rose at a double-digit rate with strong support from e-commerce, where revenues grew 26 per cent in the quarter. Adidas remains firmly on track to achieve its set targets for the full year 2018 and long-term until 2020.
The company’s gross margin increased 2.2 percentage points to 52.3 per cent. This development was driven by an improved pricing and channel mix, reflecting the company’s focus on the quality of its top-line growth. Royalty and commission income increased 10 per cent. Other operating expenses increased nine per cent. As a percentage of sales, other operating expenses were up 1.8 percentage points to 43 per cent. This increase was mainly driven by significantly higher marketing expenditure, which grew 14 per cent.
As a percentage of sales, marketing expenditure increased 1.2 percentage points to 13.5 per cent. In addition, operating overhead costs increased seven per cent as a percentage of sales to 29.5 per cent as the company continues to invest into further improving the scalability of its business. Inventories declined six per cent. Operating working capital increased one per cent at the end of June 2018.