German sportswear giant Adidas says revenue has returned to growth earlier than expected in Greater China after stores were temporarily closed in an attempt to stem the spread of coronavirus and now expects second-quarter sales in the region to be around the prior-year level.
In an update this morning (4 June), Adidas notes Greater China is its first major market on the road to recovery, where all own- and partner-operated stores have been open since mid-April.
“While store traffic remained below the prior-year level in May, targeted efforts to revitalise retail have led to sequential improvements since stores reopened,” the company says. “The traffic shortfall was more than offset by an increase in conversion rates and the exceptional growth in the company’s e-commerce business. As a result, overall revenue growth in Greater China turned positive for the month of May.”
In line with Adidas’ expectation for a gradual normalisation of its business, almost all own stores in other markets within Asia-Pacific as well as in Emerging Markets have resumed operations.
In Europe, three-quarters of the company’s stores have reopened as of today, albeit with the majority operating at reduced hours. While around half of the stores in Russia/CIS have also resumed operations, the opening rates in North America and Latin America are still significantly below 50%.
Looking ahead to the second quarter, Adidas says it does not project a significant deviation from the top- and bottom-line guidance provided in April.
In its first-quarter earnings release, the group said 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.