Adidas trips into quarterly loss but sees rebound

German sports manufacturer Adidas on Thursday, August 6, posted a significant 2nd quarter loss, but said it expected a rebound in the summer as coronavirus restrictions are lifted and online sales boom. 

Adidas reported a net loss of 295 million euros ($349  million) in the 3 months to the end of June, compared with a profit of 531 million euros in the same period the previous year.

Revenue plummeted 35% to 3.6 billion euros, from 5.5 billion euros the same period of the previous year. 

But the Bavaria-based company boasted of almost doubling its e-commerce sales, as direct-to-consumer revenue increased slightly.

At its most severe point, the pandemic closed 70% of Adidas stores worldwide. As of its earnings announcement, 92% of stores are operational, it said.

"We are now seeing the light at the end of the tunnel as the normalization in the physical business continues," Adidas chief executive Kasper Rorsted said.

The world's 2nd largest sportswear maker said that business has recovered since the end of June and that it anticipates a 3rd quarter operating profit of 600 million to 700 million euros – an improvement of around a billion euros on the 2nd quarter – barring any major further lockdowns.

"Where we are open for business, be it in physical stores or in the digital space, consumer demand for our products is high. This is a solid foundation to build on as the long-term growth prospects for the industry have become even more promising," Rorsted added.

However, Adidas said it was unable to give a full-year outlook "due to the prevailing uncertainties around the further development of the coronavirus pandemic, the pace of business normalization in the reopened stores, as well as the global macroeconomic environment."

Sales at the Adidas brand fell 33% in the quarter, while at Reebok revenue fell 42%, reflecting its dependence on the US market, which continues to see fluctuating restrictions related to the pandemic. 

Chinese sales were flat during the quarter, with May and June showing strong growth after stores reopened across the country.

The news adds to a difficult period for Adidas, which was hit by a diversity scandal that led to the resignation of its human resources chief Karen Parkin in June. 

It has since joined a number of other multinational companies in pausing its advertising on Facebook over the tech giant's policies on hate speech. – Rappler.com