Adidas ignores call for boycott of China to improve outlook
German sportswear company Adidas (ADSGn.DE) sees only a short-term impact of Chinese calls in March to boycott its products, raising its 2021 sales forecast on Friday as it expects a resumption of major sporting events to stimulate demand.
Adidas is now seeing sales grow at a high percentage rate for teens in 2021, compared to March’s forecast for growth for middle-to-high teens, with a jump of around 50% expected in the second quarter.
He said the acceleration would be driven by new products like Ultraboost running shoes designed to be recycled, as well as big events like the European Football Championship, the Copa America and the Tokyo Olympics.
Shares of Adidas, which had fallen in recent weeks amid concerns over sales in China, rose 8.2% to 0907 GMT, the biggest gain in the German blue-chip index (.GDAXI). Shares of rival Puma also rose 2%.
Western brands such as Adidas, Nike (NKE.N) and Puma (PUMG.DE) faced online attacks in China at the end of March following earlier claims that they did not would not supply cotton from Xinjiang after reports of human rights violations against Uyghur Muslims. Beijing denies such abuses. Read more
Adidas initially saw a sharp drop in demand, but sales have since recovered slowly but steadily, managing director Kasper Rorsted told reporters: “We are still very confident that we will have a very good year in China. “
Before the boycott call, sales jumped 156% in greater China in the first quarter, a year after the coronavirus pandemic struck there, to account for more than a quarter of total sales.
The Xinjiang dispute could impact Adidas’ sale of its Reebok brand, as it could hurt the company’s appeal to potential Chinese buyers, three sources told Reuters this week. Read more
But CFO Harm Ohlmeyer said the sale process was on track and Adidas was speaking to several interested parties and hoped to secure a deal by the end of the year.
Adidas said the more optimistic outlook took into account freight transportation issues due to congestion at U.S. ports and the recent blockade of the Suez Canal, as well as ongoing lockdowns in Europe, with 91% of stores now. reopened in the world.
Puma said last month it expected consumer backlash against brands in China and port congestion to affect its sales, although this gives optimistic prospects for 2021. read more
Adidas said first-quarter sales rose 20% to 5.268 billion euros ($ 6.35 billion), ahead of analysts’ average forecast of 5 billion, while net profit from continuing operations jumped to 502 million euros.
(1 USD = 0.8290 euros)
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