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Coronavirus weighs on Adidas profits

Adidas Group has warned that its second quarter sales and profits will be heavily impacted by the global coronavirus lockdowns.

It expects a possible 40% fall in second quarter sales and a drop in operating profit that could run into the hundreds of millions of euros.

The company’s currency-neutral revenues decreased by 19% in the first quarter, ended 31 March. Sales fell 20% at the Adidas brand, while Reebok’s sales were down 12%.

In euro terms, group revenues were down 19% to €4.8bn (£4.2bn). 

The company’s net income from continuing operations decreased 97% to €20m (£17m) in the period. It had a cash position of €1.975bn (£1.72bn) at 31 March. 

Adidas Group chief executive Kasper Rorsted said: “Our results for the first quarter speak to the serious challenges that the global outbreak of the coronavirus poses even for healthy companies.” 

The group said it is not able to provide an outlook for the full year. 

However, it said: “Both top- and bottom-line declines in the second quarter of 2020 are currently expected to be more pronounced than those recorded in the first quarter, with currency-neutral sales projected to come in more than 40% below the prior year level and the operating result to be negative.

”Given prevailing uncertainties, primarily around the duration of store closures and the pace of normalization subsequent to stores reopening, the further development of the coronavirus outbreak and its impact on the company’s business cannot be predicted at this point in time.

”As a result, Adidas is still not able to provide an outlook for the full year 2020 that includes this impact.”

Rorsted added: “Despite the current situation, I am confident about the attractive long-term prospects this industry provides for Adidas.

“Consumers are developing an increased appreciation of well-being. They want to stay fit and healthy through sports. Our focus on accelerating our own-retail and digital business will serve us even better in the future. We are well positioned as a global company with strong brands.”

On when shops reopen, he said: “We’re not going to see an imminent return to what we had before. We are taking all the learnings from China and building that into a recovery for the rest.”

Drapers’ coronavirus update

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