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Adidas Bumps Forecasts as Q2 Sales Jump 55%

The German firm plans to focus on running, outdoor and football categories.



WWD

https://wwd.com/business-news/financial/adidas-raises-forecast-as-q2-revenues-jump-1234893438/ Adidas said Thursday it would double down on innovative footwear and apparel for running, football, outdoors and training — and is sanguine about people returning to the office this fall. “Casualwear has taken a very predominant position in how people dress,” chief executive officer Kasper Rørsted told journalists Thursday after Adidas reported strong second-quarter figures and raised its sales and earnings guidance. Amid brightening conditions in some markets — and despite global supply-chain challenges — Adidas said 2021 revenues should advance by as much as 20 percent on the back of key product releases, including by the reintroduction of its NMD franchise. Previously, it had forecast full-year growth in the high teens. The group is now forecasting net income of 1.4 billion to 1.5 billion euros versus prior guidance of 1.25 billion to 1.45 billion euros. Adidas said it factored Vietnam factory shutdowns, port congestion and elevated shipping costs into its calculations. Revenues in the second quarter advanced 55 percent in currency-neutral terms to 5.08 billion euros, driven by all geographies except Greater China, where tensions around the sourcing of Xinjiang cotton led to boycotts of certain brands, including Adidas. The company said sales leaped 87 percent in North America and 99 percent in EMEA in the second quarter versus the year-ago quarter. Compared to 2019, sales in both regions gained 15 percent. Revenues in Latin America more than tripled, up 230 percent, while Asia Pacific grew 66 percent. Adidas cited “extended lockdowns” in the Asia Pacific region among factors for the relatively modest gains. Second-quarter tallies there were 10 percent below 2019 levels. “In Greater China, the company recorded a steady business recovery as well as sequential sell-out improvements throughout the quarter. Nevertheless, revenues in Greater China declined 16 percent during the three-month period,” the company noted. Adidas also swung to profit, reporting net income from continuing operations of 387 million euros, versus a loss of 243 million euros in the year-ago quarter. As reported, the group plans to divest the Reebok brand, so all income and expenses of the Reebok business are reported as discontinued operations as of the first quarter. During the call with journalists, chief financial officer Harm Ohlmeyer said Adidas hopes to conclude a deal “by the end of summer.” He cited “very strong interest” from investors, but declined to say if the final contenders were financial or strategic buyers. Reebok’s sales bounded 94 percent in the second quarter versus a year ago, and 13 percent above 2019 levels, Adidas noted. Rørsted lauded the return of major sporting events, noting that more than 20 Adidas athletes at the 2020 Summer Olympics in Tokyo have already taken home a gold medal, including Alexander Zverev, Katie Ledecky and Jonathan Brownlee wearing its Adizero Adios Pro. In addition, the Adidas-sponsored teams of Great Britain and Germany are performing well and showcasing its performance products to a worldwide audience. In the second quarter, revenue in soccer and outdoor categories grew at triple-digit rates. Rørsted noted Adidas would exit or de-emphasize sports such as lacrosse. During the call, Rørsted revealed that Rupert Campbell would become president of Adidas North America effective Jan. 1. He succeeds Zion Armstrong, who decided to leave the company at the end of this year to reunite with his family in New Zealand. Campbell has been with Adidas since 2012 and most recently drove strong market gains as managing director of Adidas in Russia/CIS.

Rørsted said Adidas would drive its business with product innovations and global campaigns, leveraging sporting events and its digital capabilities. On the sneaker front, Adidas said it would “significantly” expand its Futurecraft 4D portfolio with the introduction of the 4D FWD Pulse; scale its ZX franchise with the new ZX 5K Boost, and quadruple the size of its high-top Forum franchise via “several iterations as well as dedicated marketing activities.” Rørsted couldn’t resist calling its new NMD S1, which looks substantially different from the model first introduced in 2015, “a super cool shoe.”

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