Adidas shares slide as it confirms China graft probe

FRANKFURT — Adidas shares slid Monday as the German sportswear giant confirmed it was “intensively investigating” allegations that senior employees in China embezzled millions of dollars. 

The Financial Times reported at the weekend that a letter, allegedly written by “employees of Adidas China”, accused several Chinese employees by name.

In a statement Monday Adidas — only just recovering from a period of turbulence after its split from controversial rapper Kanye West — said a probe was under way.

“We received an anonymous letter indicating potential compliance violations in China,” the group said in a statement, adding it was “intensively investigating this matter together with external legal counsel”.

“Adidas takes allegations of possible compliance violations very seriously and is clearly committed to complying with legal and internal regulations and ethical standards in all markets where we operate,” it added.

Shares in the outfitter were down about 3.5 percent on Frankfurt’s blue-chip DAX index on Monday.

China is traditionally a hugely important market for Adidas. Its sales there suffered in recent years during long-running coronavirus lockdowns but had started recovering strongly.

According to the Financial Times, those accused included one of the company’s executives involved with Adidas’s marketing budget in China, which it said stood at 250 million euros ($268 million) a year.

Another Adidas China manager is said to have received “millions in cash from suppliers, and physical items such as real estate”, according to the paper.

The letter, which was posted this month on the Chinese social media platform Xiaohongshu, was no longer visible on the website at the weekend, but a purported copy, the authenticity of which AFP was unable to verify, was posted on several accounts.

Company insiders quoted by the paper said the letter did not provide evidence for the allegations but appeared well-informed about confidential internal issues.

In 2022 Adidas ended its tie-up with West, with whom the company had developed the lucrative line of Yeezy products, after his anti-Semitic comments triggered an outcry. 

It dealt a huge financial blow to the sportswear giant, which recorded its first annual loss in over 30 years in 2023. 

However, in recent months the company had been returning to a better financial footing. — AFP / pic TMR FILE