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Due to pandemic supply chain constraints, adidas sales could reach € 500 million this year

Adidas AG Update

Adidas warns that supply chain constraints caused by the pandemic could generate as much as € 500 million in sales by the end of the year.

The turmoil means that the world’s largest sportswear maker couldn’t produce enough apparel and shoes to meet demand, its chief financial officer Harm Olmeier told journalists Thursday.

Nonetheless, adidas raised its 2021 outlook for the second time this year after second-quarter sales reached € 5.08 billion, up 52% ​​year-on-year.

According to the company, sales in the first half of the year, excluding Reebok, were slightly above 2019 levels before the pandemic.

Recovery is even faster without supply chain delays. The company expects to lose more than € 500 million in sales by the end of the year due to the impact on production. That’s more than 2% of 2021 analyst sales forecasts.

“The expected impact has already been incorporated into the year-round guidance,” said Kasper Rorsted, CEO. “This year’s earnings are the highest compared to previous guidance for teens. He added that it would increase by 20%. [growth] Percentage “. He also said that the net profit from continuing operations was between € 1.4 billion and € 1.5 billion, and between the previously expected € 1.25 billion and € 1.45 billion.

Adidas’ share price fell by about 4% on Thursday at noon in Frankfurt.

Since mid-July, the company has been hit by a government-imposed factory blockage in Vietnam, a major adidas shoe producer.

“Vietnam’s situation will begin to improve later this month and we expect it to lead to a mostly operational procurement network by the end of the third quarter,” said Rorsted.

Adidas has moved production to other countries, but “current interruptions will have a negative impact on our business in the second half of the year as we cannot fully meet the strong demand for our products,” he added. rice field.

Vietnam’s factory closures are in addition to existing logistics problems, Rorsted said. “Long-lasting pandemic.. .. ..It has led to significant capacity savings on both ships and containers, “he added, adding that higher freight rates and delays are the result.

“With the return of sports to the central stage this summer, we have achieved a very successful quarter,” said Rorsted, who grew sales in the football and outdoor categories at a triple-digit rate. I pointed out the fact that I did.

Second-quarter operating profit increased to € 543 million, compared with an operating loss of € 263 million in the previous year when retailers around the world were forced to close during the first wave of the pandemic. did. Second-quarter revenue and operating income exceeded analysts’ expectations.

Excluding the effects of foreign exchange, sales in Europe and North America almost doubled in the second quarter. But in China, adidas fell 16% year-on-year from April to June. Western brands, including Adidas, have suffered domestic criticism of previous statements about human rights abuses against Uighur Muslims denied by Beijing.

Due to pandemic supply chain constraints, adidas sales could reach € 500 million this year

Source link Due to pandemic supply chain constraints, adidas sales could reach € 500 million this year

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