Business in China continues to be difficult for western sporting goods manufacturers.
(Photo: Reuters)
Munich In the fight against Corona, China is closing many shops and cutting production. This also weighs on the German sporting goods giant Adidas. In the first quarter, the revenues of the second largest sporting goods group in the world fell by three percent to 5.3 billion euros after currency adjustments. In addition to the new corona lockdowns, the boycott of western brands was also responsible for the 35 percent drop in sales in China. Adidas now expects to end up only in the lower range of the forecasts for 2022.
Adidas boss Kasper Rorsted tried to highlight the positive sides of the start of the year. Demand was very high in all western markets. In the greater Asia-Pacific region, they will return to the growth zone in the current quarter. “However, we assume that the challenging market environment in China will persist.”
China is actually considered to be the industry’s greatest hope for growth. Last year, Adidas’ China sales had increased by three percent, but sales there had already collapsed by 24 percent in the fourth quarter.
There is a boycott of Western brands in the country, and Adidas has not always offered the right products for the Chinese market. As a result, the Dax group had replaced its China boss. Adidas now wants to develop more products in China for China.
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This is at least partly a change of strategy. For a long time, the company relied primarily on uniform global products. Due to new lockdowns, however, the trend reversal has now become more difficult.
Puma grows stronger
Last year, Adidas sales increased by 16 percent to 21.2 billion euros. Without the problems in the supply chains, corona effects and the problems in China, the group would have been able to earn 1.5 billion euros more. In the first quarter, problems in the supply chain reduced sales by 400 million euros. Profit from continuing operations fell from 502 to 310 million euros.
At the start of the year, things went worse for Adidas than for Puma. The smaller competitor from Herzogenaurach had increased sales in the first quarter by 20 percent to 1.9 billion euros. “Based on such a strong first quarter, we would usually raise our outlook for the full year,” said Puma CEO Björn Gulden. In view of the corona pandemic and the Ukraine war, however, it is better to stick to the forecast of more than ten percent growth this year.
Adidas, on the other hand, has now slightly restricted its own forecast. So far, the group had forecast a currency-adjusted increase in sales of eleven to 13 percent. Profit from continuing operations should be between 1.8 and 1.9 billion euros. Adidas now assumes that both values will end up at the lower end of the range.
More: Puma starts the new year with records.