Adidas sales growth weighed down by Chinese boycott of Western brands

Adidas already saw online sales return to growth in China in June.

Adidas felt the impact of a Chinese boycott of Western brands on its second-quarter results and is also suffering from the closure of factories in major supplier Vietnam due to rising Covid-19 infections.

The German sportswear company still raised its outlook for full-year sales and profitability as it said it has seen demand recover in China since calls for a boycott in late March, and said it hopes to restore production in Vietnam soon.

But Adidas shares fell 4% as analysts noted that its growth was lagging rivals Nike and Puma, which both reported that sales nearly doubled in recent earnings releases.

Second-quarter sales at Adidas rose 52% to €5bn, while operating profit came in at €543m, ahead of analysts' average forecasts.

Adidas raised its 2021 outlook to predict sales will grow up to 20%, and net income from continuing operations will reach €1.4bn to €1.5bn. That compared to Puma's forecast for sales to rise at least 20% for 2021.

The new Adidas outlook assumes that the sourcing network will be back to normal by the end of September and that the company will continue to see a steady recovery in Greater China, where sales fell 16% in the second quarter.

Western brands including Adidas faced online attacks in China in late March over past statements saying they would not source cotton from Xinjiang after reports of human rights abuses against Uyghur Muslims. Beijing denies any such abuses.

Adidas already saw online sales return to growth in China in June, chief executive Kasper Rorsted told journalists, adding he expects the country to record strong growth for the full year and he welcomed a government drive to promote youth sport. 

Reuters