German sports manufacturer Adidas said on Tuesday, November 10, that sales and profitability recovered in the 3rd quarter as shops reopened, alongside booming e-commerce sales, with a modest profit expected in the final quarter.
Adidas reported net profit of 546 million euros ($646 million) for the 3 months to September, down 15.5% from 646 million euros in the same period of the previous year.
But this followed a damaging 2nd quarter for the company, when it posted a 295-million-euro loss on sales of 3.6 billion euros.
Third quarter revenues fell 7% year-on-year to 6 billion euros, but beat expectations according to a survey by financial services provider FactSet, with e-commerce sales up 51%.
“We saw a strong recovery in our business in the 3rd quarter,” chief executive Kasper Rorsted said in a statement, but “a worsening of the pandemic in many regions of the world is again requiring our patience and support.”
The Bavaria-based company predicts its top line to “develop similarly in the 4th quarter as it did in the 3rd,” with operating profit to be between 100 million and 200 million euros.
The outlook, however, “assumes no addition major lockdowns,” and a store opening rate above 90%.
Adidas said 93% of stores were open, down from 96% at the end of September.
Major European markets including France and Britain have taken steps to shut stores to curb a second spike in coronavirus cases.
At its most severe point in the spring, the pandemic closed 70% of Adidas stores worldwide.
“We are now well-prepared to cope with these short-term uncertainties,” Rorsted said, with the company “better positioned to benefit from the long-term industry growth drivers accelerated by the pandemic such as health and well-being, athleisure, and digitization.”
In the 3rd quarter, traffic in stores continued to improve yet remained “significantly below prior year levels,” the company said.
Sales at the Adidas brand fell 2% while at Reebok sales declined 7%, reflecting its dependence on the United States market.
In China, sales fell 5% compared with the 2nd quarter after “initial pent-up demand faded,” the company said, but it expects business to return to growth in the final quarter.
The Asian giant boosted 2nd quarter revenues after the country reopened earlier this year while much of Europe and the US was still under lockdown. – Rappler.com