Adidas lowers full year forecast as Q2 profits drop 27.9%

Adidas has reported that its operating profits dropped 27.9% year-on-year from €543m (£454.5m) to €392m (£328.1m) in the second quarter ending June 30 2022 (Q2 FY22), following the suspension of operations in Russia, Covid-related lockdowns in Greater China, and higher supply chain costs. Consequently, Adidas has adjusted its FY22 guidance, with expectations for total group revenues to grow at a mid-to-high single-digit rate in 2022. Previously, expectations were at the lower end of the 11% to 13% range. Net income from continuing operations is now expected to reach €1.3bn (£1.08bn) which was previously at the lower end of the €1.8bn (£1.5bn) to €1.9bn (£1.59bn) range. However, the company has increased forecasts for North America and Latin America, with North America revenues now expected to increase in the high teens. Sales in Latin America are projected to grow between 30% and 40%, and both were previously forecast for mid-to high-teens growth. All in all, revenues increased 4% in Q2 FY22, which was led by Western markets, although net income declined 7% year-on-year from €387m (€323.9m) to €360m (£301.3m), and Adidas suffered a €300m (£251.13m) negative impact from macroeconomic constraints. Supply chain constraints following last year’s lockdowns in Vietnam reduced top-line growth by €200m (£167.4m) in the quarter, and the company’s decision to suspend operations in Russia reduced revenues by more than €100m (£83.7m) in the quarter. Revenues in North America increased 21% to €1.7bn (£1.4bn), and revenues in Latin America increased 37% to €514m (£430.2m). Asia-Pacific returned to growth with revenue growth of 3% to €550m (£460.4m) despite still being impacted by limited tourism activity in the region. Meanwhile, Greater China revenues fell 35% to €719m (£601.8m) in Q2, which is in line with previous expectations. Overall, Adidas’ revenue development was strongest in Football, Running and Outdoor, which all grew 10% to €5.59bn (£1.42bn) in the second quarter, compared with € 5.07bn (£4.25bn) in Q2 FY21. Kasper Rorsted, Adidas CEO, said: “Our Western markets continued to show strong momentum in the second quarter amid heightened macroeconomic uncertainty. With Asia-Pacific returning to growth, markets combined representing more than 85% of our business grew at a double-digit rate. “We have to take into account a potential slowdown in consumer spending in all other markets for the remainder of the year."

Adidas lowers full year forecast as Q2 profits drop 27.9%

The company’s decision to suspend operations in Russia reduced revenues by more than €100m (£83.7m) in the quarter

Check out our free weekly podcast

Read Next

Outdoor brand Sealskinz opens first store in London

Zara unveils 51,000sq ft flagship store at Bullring and Grand Central

Boohoo secures lender consent for £39m fundraiser

Saint + Sofia opens first physical store in Covent Garden

Superdry warns of sales decline following stock exchange departure

Outdoor brand Sealskinz opens first store in London

Zara unveils 51,000sq ft flagship store at Bullring and Grand Central

Boohoo secures lender consent for £39m fundraiser

Saint + Sofia opens first physical store in Covent Garden

Superdry warns of sales decline following stock exchange departure

Today’s news in brief-25/11/24

Outdoor brand Sealskinz opens first store in London

BRC urges public to give retail workers gift of a ‘safe Christmas’

Zara unveils 51,000sq ft flagship store at Bullring and Grand Central

Ann Summers owners explore options amid widening losses

Kingfisher lowers profit guidance amid flat Q3 sales

Check out our free weekly podcast

Read Next

Outdoor brand Sealskinz opens first store in London

Zara unveils 51,000sq ft flagship store at Bullring and Grand Central

Boohoo secures lender consent for £39m fundraiser

Saint + Sofia opens first physical store in Covent Garden

Superdry warns of sales decline following stock exchange departure

Related Articles

Today’s news in brief-25/11/24

Outdoor brand Sealskinz opens first store in London

BRC urges public to give retail workers gift of a ‘safe Christmas’

Zara unveils 51,000sq ft flagship store at Bullring and Grand Central

Ann Summers owners explore options amid widening losses

Kingfisher lowers profit guidance amid flat Q3 sales