Adidas SE forecast robust growth for the year, even as revenue from Russia and former Soviet states is poised to drop by half amid the war in Ukraine.
The German company yesterday forecast that sales would increase by 11 to 13 percent on a currency-neutral basis, as demand for sneakers remains robust.
Analysts have been expecting 9.5 percent growth.
Photo: Reuters
Consumer companies face a whirlwind of geopolitical challenges as they emerge from two difficult years during the COVID-19 pandemic. Russia’s invasion of Ukraine has brought global condemnation, with some of the world’s most iconic brands — including Adidas, Nike Inc and Puma SE — halting operations in the country.
Adidas said the war in Ukraine is putting as much as 250 million euros (US$273.77 million) of revenue, or half of its business from Russia and the Commonwealth of Independent States region, at risk. That reflects the suspension of retail and e-commerce operations in Russia and represents about 1 percentage point of growth in total sales.
In China, Adidas expects sales to increase at a mid-single digit percentage rate, up from 3 percent growth in the country last year.
Foreign brands are struggling to hang onto China as a major growth driver after almost one year of consumer boycotts and preferential treatment for homegrown companies, including Anta Sports Products Ltd (安踏體育) and Li Ning Co (李寧).
Adidas earlier this week replaced the head of its Chinese operations, promoting an executive who has been managing a local brand in China.
North America and Latin America are projected to be the biggest growth engines, with sales showing mid-to-high-teens percentage growth, Adidas said, adding that Europe, the Middle East and Africa, as well as the Asia-Pacific region, should see mid-teens percentage growth.
Adidas said it also plans to raise prices to help cover the higher costs associated with supply-chain constraints.
Net income from continuing operations is expected to grow to between 1.8 billion euros and 1.9 billion euros, Adidas said.
The firm has completed the sale of its Reebok unit and introduced another share-buyback program.
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