MUNICH • Adidas AG’s sales are bouncing back more rapidly than expected after global store closures, with a surge in e-commerce helping the German sportswear company ride out Covid-19 lockdowns.
Overall sales were better than analysts expected in the latest three months and the company said its store operations are starting to return to normal.
Third-quarter (3Q) revenue is still expected to fall by a mid to high single-digit percentage from a year earlier, but that is better than the 34% collapse in 2Q.
The shares rose 1.3% early yesterday in Frankfurt, limiting this year’s decline to 16%.
After closing 70% of its stores globally because of the pandemic, Adidas is grappling with the new normal between online shopping and physical retail as it seeks to rekindle growth. With more than nine out of 10 stores open again globally, fewer customers are coming in, but a higher percentage are buying.
“We are now seeing the light at the end of the tunnel,” CEO Kasper Rorsted said in a statement. “From everything we know today, our recovery will continue in3Q.”
The company said there is still too much uncertainty about the pandemic, the pace of shopping in re-opened stores and the global economy to offer a full-year forecast. While China is seeing double-digit growth thanks to lifting lockdowns as early as March, North America and Latin America are still suffering from disruptions as the coronavirus rages.
Adidas has other challenges, too. After cutting costs and benefitting from strong demand for retro footwear, Rorsted needs to tap his creative side as Adidas prepares to unveil a new strategy cycle heading into 2021.
While Rorsted just agreed to a five-year contract extension, he is under growing pressure to create more opportunities for minorities and women. Adidas’ human resources chief recently resigned after complaints from Black employees about her handling of diversity issues.
Adidas’ 2Q sales of €3.58 billion (RM17.76 billion) were above analysts’ estimate of €3.24 billion. E-commerce almost doubled in the period.
Adidas said it expects to turn an operating profit in 3Q of between €600 million and €700 million, another improvement after a loss of €333 million by that metric in 2Q. — Bloomberg