Sporting goods are produced in Asia – and also sold there. Factory closures in Vietnam and sales collapses in China made Adidas troublesome. However, the company does not have an alternative.
The persistent delivery problems caused by plant closings in Vietnam and lower demand on the important Chinese market spoiled the third quarter for the world’s second largest sporting goods manufacturer, Adidas.
The group confirmed its forecast for the year on Wednesday, but now expects to land at the lower end of the range. The Dax company’s share then came under pressure.
Adidas had recently announced a profit from continuing operations of 1.4 to 1.5 billion euros. Sales should continue to grow by up to 20 percent after adjusting for currency effects. In the first nine months, 1.37 billion euros were raised, with sales growth of 24 percent after adjusting for currency effects. Traditionally, however, the fourth quarter is one of the weakest earnings for the Herzogenaurach-based company.
Sales growth weakened in the third quarter. The persistently problematic environment in China with a drop in sales of 15 percent, corona-related lockdowns in the Asia-Pacific region and supply chain problems would have dampened sales growth by 600 million euros. According to the information, sales rose by three percent after adjusting for currency effects to EUR 5.75 billion. The growth drivers were Europe and North America, which increased by around nine percent after adjusting for currency effects.
For months, the plants in Vietnam, the country with the largest shoe production in the world, will be completely closed due to the pandemic. In the meantime, operations have resumed, and Adidas expects full production capacities again by the end of the year. “2021 turned out to be a significantly different year than we had all believed in January,” said Adidas CEO Kasper Rorsted. But there is no alternative to the production location in Asia.
In China, where Adidas normally not only makes a large part of its sales, but also generates the highest profit margins, it was not only the corona pandemic but also political problems that hampered business. Due to political tensions, the political leadership in Beijing had called for a boycott of Western companies in phases – Adidas had also felt that, it said. The Chinese market will be looked after even more closely in the future, and has already achieved successes with outdoor products, for example.
The sale of the second brand Reebok to the US-American Authentic Brand Group (ABG) should take place in the first quarter of next year. Adidas had agreed with the buyer in August on a price of 2.1 billion euros for the traditional brand. In 2006, Adidas had to pay a billion more, but in between already sold parts for 0.4 billion euros. CFO Harm Ohlmeyer did not want to say on Wednesday how high the loss of the takeover including investments was overall. Reebok has also done a lot for the Adidas brand, he said.
Source From: Stern
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
