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April 27, 2020

Adidas in 97% profit slide as store closures weigh on Q1

Adidas has booked a 97% slide in profits as the impact of coronavirus weighed heavily on its first-quarter results.

By Hannah Abdulla

Adidas has booked a 97% slide in profits as the impact of coronavirus weighed heavily on its first-quarter results.

Net income from continuing operations came in at EUR20m (US$21.7m), compared to EUR631m last year, while global revenues fell 19% in currency-neutral terms and EUR terms to EUR4.8bn. 

Sales at the firm’s namesake brand declined by 20%, while Reebok sales were down 12%.

Most of its stores (70%) worldwide remain closed. Its e-commerce business, however, saw revenues grow 35% for the first three months ending 31 March.

The largest of its revenue declines were in Greater China since the end of January as well as in Japan and South Korea in March, which led to a 45% revenue decline in the Asia-Pacific region.

Store closures weighed on first-quarter sales in emerging markets where revenues were 11% lower, Europe at 8% lower, and Latin America which was flat. North America and Russia saw 1% and 9% revenue growth, respectively.

The German sportswear brand said it is not able to provide a full-year outlook at present. Top and bottom-line declines in the second quarter of 2020 are expected to be “more pronounced” than those recorded in the first quarter, with currency-neutral sales projected to come in more than 40% below the prior-year level and the operating result to be negative.

“Given prevailing uncertainties, primarily around the duration of store closures and the pace of normalisation subsequent to stores reopening, the further development of the coronavirus outbreak and its impact on the company’s business cannot be predicted at this point in time. As a result, Adidas is still not able to provide an outlook for the full year 2020 that includes this impact,” the firm said.

Kasper Rosrsted, CEO, added: “Despite the current situation, I am confident about the attractive long-term prospects this industry provides for Adidas. Consumers are developing an increased appreciation of well-being. They want to stay fit and healthy through sports. Our focus on accelerating our own-retail and digital business will serve us even better in the future. We are well-positioned as a global company with strong brands.”

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