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German sportswear company Adidas pared full-year sales and profit forecasts on Wednesday, citing sourcing disruptions and a tough market environment in China after third quarter results missed analyst expectations.
Adidas reported third quarter sales up a currency-neutral 3 percent year on year at €5.752 billion ($6.65 billion) while operating profit fell 8.5 percent to €672 million, missing average analyst forecasts for €5.83 billion and €682 million respectively.
Adidas shares were down 3 percent in early Frankfurt trade.
Factories in Vietnam, a major supplier to the footwear industry, closed for up to 11 weeks because of Covid-19 outbreaks. Adidas rival Puma has warned that supply bottlenecks would mean a shortage of its products well into 2022.
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Adidas said the challenging market in Greater China, Covid-19 lockdowns in the Asia-Pacific region and supply chain disruptions had cut revenue growth by about €600 million in the third quarter.
Sales fell 15 percent in Greater China owing to renewed pandemic restrictions as well as the “geopolitical” situation, the company said.
Western brands including Adidas have faced a consumer boycott in China since March over past statements saying they would not source cotton from Xinjiang after reports of human rights abuses against Uyghur Muslims. Beijing denies any abuses.
Adidas said it still expects 2021 currency-neutral revenue to rise by up to 20 percent, but it now expects growth to come in lower, without being more specific.
It also expects to reach the lower end of previous forecasts for a 2021 operating margin between 9.5 percent and 10 percent and net income from continuing operations of €1.4 billion to €1.5 billion.
By Emma Thomasson; Editor: David Goodman
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Adidas Hikes Outlook Despite Hit to China Sales
German sportswear company Adidas raised its outlook for full-year sales and profitability as demand soared in most of the world but took a hit in China where Western brands faced a boycott of their products in late March.
