Germany’s Adidas Reports Double-Digit Growth in Western Markets in Q1FY22

Adidas saw strong demand in all Western markets, supply chain constraints following last year’s lockdowns in Vietnam reduced revenue growth by around 400 million euros in first quarter of 2022. In addition, the challenging environment and the COVID-19 related lockdowns in Greater China and Asia-Pacific continued to weigh on revenue development.

DTC revenue grew 1% year over year, a 33% increase over 2020 level. While Adidas e-commerce revenue saw a double-digit increase in full-price sales, revenue from the company’s own digital channel increased 2% in the quarter, reflecting exceptionally strong growth in the prior year period. Compared to the 2020 level, e-commerce revenues increased by 50% in the first quarter.

Adidas saw strong demand in all Western markets, supply chain constraints following last year’s lockdowns in Vietnam reduced revenue growth by around 400 million euros in first quarter of 2022. In addition, the challenging environment and the COVID-19 related lockdowns in Greater China and Asia-Pacific continued to weigh on revenue development.

The company’s first-quarter gross margin decreased 1.9 percentage points to 49.9%. This decrease is mainly due to a significant increase in supply and transportation costs. In addition, the negative impact of a less favorable market mix as well as the difficult comparables of the previous year in e-com weighed on the evolution of the gross margin. These effects could not be offset by the positive impact of a significantly higher share of full-price sales as well as early selective price increases, primarily on DTC proprietary products, the company said in a statement.

“In the first quarter, consumer demand for our brand and products was strong in all Western markets. Our combined sales in North America, EMEA and Latin America grew at a double-digit rate. Supported by an exceptionally strong wholesale order book and a continued focus on growing our own DTC channels, we expect this positive development to continue for the remainder of the year,” said Kasper Rorsted, CEO of Adidas. “In the East, we will return to growth in Asia-Pacific in the second quarter, while we expect the challenging market environment in Greater China to continue. With strong double-digit growth in the vast majority of our markets, representing over 80% of our business, we are well positioned for success in 2022.”

Although several external factors continue to weigh on industry-wide demand and supply, Adidas confirms its 2022 revenue and earnings outlook. While the company continues to expect While currency-neutral earnings are growing at a rate between 11% and 13% percent, growth is now expected to be at the lower end of this range due to the severe impact of the COVID-19-related lockdowns in China. As a result, net income from continuing operations is also expected to reach the lower end of the previously disclosed range of between €1.8 billion and €1.9 billion.

Due to less favorable market mix due to below-expected revenues in Greater China, the company’s gross margin is now expected to be around the prior-year level of 50.7% in 2022. While Adidas will continue to invest in the brand, its products as well as DTC and digital to support double-digit growth in all other markets in 2022 and long-term market share gains worldwide, the company also expects that its operating margin is around the previous year’s level of 9.4 percent. hundred.

Fibre2Fashion (RR) Press Office

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