Adidas lowers 2022 financial outlook amid slow recovery in China
Adidas has lowered its financial outlook for 2022, citing a slower-than-expected recovery in Greater China due to its COVID-19 pandemic restrictions.
The German sportswear group said it expected full-year net income from continuing operations to reach about £1.09 billion (€1.3 billion), having previously predicted the lower end of a range between £1.5 billion and £1.6 billion.
Adidas said in a market update: "Given the continued widespread COVID-19-related restrictions, Adidas now expects revenues in Greater China to decline at a double-digit rate during the remainder of the year."
The sportswear giant added that initiatives to clear excess inventories in the Chinese market would also impact margins during the remainder of the year. The group also remained cautious over a "potential slowdown of consumer spending" in other markets during the second half as a result of more "challenging macroeconomic conditions".
Adidas said that second-quarter sales had increased by 10% to £4.7 billion, driven by growth in North America and Latin America. Second-quarter net income from continuing operations declined to £302 million, from £325 million a year earlier, driven by lower margins.
The group added: "Despite these headwinds, Adidas continues to expect double-digit revenue growth during the second half of the year for the total company. In addition to easier prior year comparables, the acceleration will be driven by Adidas’s strong product pipeline, the restocking opportunity with its wholesale customers given unconstrained supply, as well as the support from major sporting events."
