German sportswear giant Adidas has lowered its guidance for the year as a result of a slower-than-expected recovery in mainland China.
The company explained that ongoing lockdowns due to COVID-19, as well as a consumer boycott of Western products, were the reasons for the change in its forecasting.
Although there had been no slowdown in wholesale or retail in other markets yet, Adidas also said uncertainties around consumer sentiment in those regions would likely also weigh on the company’s results, warning of a potential slowdown to come.
For the full year, Adidas now expects growth in the mid- to high-single digits, instead of between 11 and 13 percent. Last year, Adidas’ net sales grew 16 percent to 21.23 billion euros.
Although the company will not report its results until Aug. 4, it disclosed that currency neutral revenues had grown 4 percent during the second quarter.
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On Tuesday evening, Adidas shares fell slightly on the news.
Until recently, each of Adidas’ three main markets — Europe, America and China — brought in roughly a third of the brand’s revenues. And although sales had increased in the Americas, Europe and other parts of the Asia Pacific region, the company said it expected sales in mainland China to continue to dive at a double-digit rate. During the first quarter, revenues dropped 35 percent.
The news from Adidas was not unexpected. As early as May, Adidas had said it expected results at the lower end of its guidance. And previously, analysts from the likes of JP Morgan, Bank of America, Warburg Research and DZ Bank had predicted Adidas might have problems in China for longer than expected and that in fact, its previous levels of business there might never be resurrected.
In general, analysts have noted that Adidas is not coping as well with various crises and economic issues as its smaller German competitor: Puma. German media have reported that over the past few months some investors have been questioning Adidas senior management as to why.
Puma will report its six-month results in Germany on Wednesday morning.