The corona lockdowns in China and their effects on consumer behavior are having a significant impact on the sporting goods manufacturer Adidas. Due to numerous store closures and declining customer traffic in the country, the board now expects sales in China to collapse. CEO Kasper Rorsted draws hope from better business in other regions. Overall, however, the manager expects lower profitability for the current year. The “challenging market environment in China” is likely to remain, he said according to the announcement. In pre-market trading on the Tradegate platform, Adidas shares fell 1.7 percent.
Due to the “serious effects” of the lockdowns, the profit from continuing operations should now only be in the lower range of the targeted range of 1.8 to 1.9 billion euros, the company listed in the Dax announced on Friday in Herzogenaurach. The operating margin should only be around the previous year’s level of 9.4 percent. Adidas had previously promised 10.5 to 11 percent.
China and supply chain bottlenecks weigh on sales
In terms of sales, on the other hand, the Executive Board expects currency-adjusted growth of 11 to 13 percent. The lack of revenue in China and supply chain bottlenecks are likely to weigh on development by around 200 million euros. However, the company hopes its other regions in North and Latin America, EMEA (Europe, Middle East and Africa) and Asia Pacific will grow as planned. The dynamics of the markets should compensate for the decline in sales in China. “In the eastern markets, we will return to growth in Asia Pacific in the second quarter,” Rorsted promised in a statement.
In the first quarter, the company had already earned slightly more than analysts had expected. Sales from January to March rose slightly to EUR 5.3 billion. The group also benefited from the weakness of the euro. Adjusted for currency effects, however, revenue fell by three percent. Adidas benefited from growth in North and Latin America as well as in EMEA, but struggled with a challenging market environment and the lockdowns in China and Asia-Pacific.
Because the board had to put significantly more money into advertising, the operating result fell by 38 percent to 437 million euros. Profit from continuing operations fell almost 40 percent to 310 million euros. (dpa)