Adidas Tumbles After Warning on 2022 Margins, China Sales Decline
06 Maggio 2022 - 11:01AM
Dow Jones News
By Joshua Kirby
Shares in Adidas AG fall in early trade Friday after the German
sporting-goods company warned of a hit to full-year profitability
as sales in China continue to be dragged by pandemic-related
lockdowns.
At 0818GMT, shares traded 5.8% lower at EUR177.30.
In the first quarter, Adidas booked a 3% decline in sales at
constant currency to 5.30 billion euros ($5.59 billion). Growth in
the company's Western markets was offset by a 35% plunge in Greater
China, where a challenging market environment is exacerbated by
pandemic-related lockdowns, Adidas said.
Operating profit meanwhile fell to EUR437 million in the quarter
from EUR704 million previously, on a margin that contracted by more
than 5 percentage points to 8.2%.
For the full year, Adidas said it no longer expects growth in
its gross and operating margins, as previously targeted. The
company did however back its targets for growth in sales and net
profit for the year, albeit at the lower end of guided ranges.
The cut in profitability guidance comes as sales in Greater
China are expected to fall significantly in 2022 compared with the
previous year, Adidas said. The company had previously said it was
aiming to return to organic growth in the market this year.
First-quarter results came in ahead of expectations but these
were low to begin with, Baader Helvea analyst Volker Bosse said in
a research note following the print. The company's 2022 sales
target meanwhile looks optimistic given the rising macro-economic
headwinds, he added.
Consensus estimates for operating profit are likely to take a
hit from the margin warning, Stifel's Cedric Lecasble said in a
note. The new outlook could see a cut of some 12% to existing
consensus, Lecasble said.
Write to Joshua Kirby at joshua.kirby@wsj.com;
@joshualeokirby
(END) Dow Jones Newswires
May 06, 2022 04:46 ET (08:46 GMT)
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