12 November 2021
Sales at adidas were stunted this quarter, thanks to a slump in Greater China.
Overall revenue in the third quarter grew just 3% to 5.752 billion euro. Executives said pandemic-related lockdowns and supply chain issues in China caused overall revenue growth to be reduced by about 600 million euro this quarter. In China, specifically, sales declined 15%.
adidas stock was down more than 5% in trading midday on Wednesday.
Excluding these problems, adidas said it would likely have seen a total revenue growth of about 14% this quarter. Since the second half of July, regional COVID-19 related lockdowns and flooding across China have contributed to a sales decline in the region.
“In Greater China, we remain confronted by several range challenges,” said adidas CEO Kasper Rorsted in a call with investors. “The geopolitical situation with the resurgence of COVID-19-related restrictions, as well as natural disasters delayed top line recovery.”
adidas said it is actively working on solutions and forming a team of leaders to fully focus on mitigating the business impact in China. According to adidas CFO and board member Harm Ohlmeyer, “A detailed action plan has been developed and is already in execution,” which involves strengthening brand heat, commercial impact, range and physical stores, as well as removing extra product from the market. adidas said it has already reallocated more than 10 million units of product from China to other markets in short supply.
Within China, adidas is developing localized marketing campaigns from a new creation studio in Shanghai that features relevant Chinese athletes. The goal, Ohlmeyer said, is to make sure that one third of new products in the country are tailored specifically to the Chinese consumer.
To read the rest of this article by Shoshy Ciment, click on Footwear News – adidas Sales take a Hit in China