Adidas lowers expectations for 2022 amid lockdown in China

Adidas lowered expectations for 2022 after a first-quarter slump as renewed COVID-19-related lockdowns in Greater China continue to hit the German sportswear company.

Currency-neutral first-quarter sales shrank 3% worldwide to 5.3 billion euros ($5.58 billion), while income from continuing operations fell 38% to 310 million euros, it said on Friday.

First-quarter sales in Greater China plummeted 35%; For the year, sales are expected to fall significantly due to store closures and sharp falls in traffic.

The company now expects to be at the lower end of its 2022 guidance with currency-neutral sales growth of 11% to 13% and net income from continuing operations of between €1.8 billion and €1.9 billion.

Adidas also lowered its operating margin guidance, saying it will remain at last year’s level of 9.4%, rather than rising to 11%.

“In this environment, marked by severe external challenges, it is imperative to stay focused on our strategic goals,” said Chief Executive Kasper Rorsted.

“While we remain agile, we will not compromise our long-term growth opportunities for short-term profit optimization.”

The company expects a return to growth in the second quarter despite the continued decline in sales in Greater China and a EUR 200 million negative impact from supply chain restrictions.

In the second half of 2022, net sales are projected to increase by over 20%, driven in part by unrestricted supply, strong momentum in Western markets and major sporting events. Adidas lowers expectations for 2022 amid lockdown in China

Gary B. Graves

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