Adidas recovers in the third quarter – burden from shutdown

Adidas

The sports brand recorded significantly better business in the third quarter than in the spring.


(Photo: Reuters)

Munich The Dax-Group Adidas after an upward trend in the third quarter, it is preparing for further burdens from the measures in the corona crisis. Especially in Europe, fewer customers have come to the stores since the governments introduced new restrictions on public life, Adidas warned on Tuesday during the presentation of the current annual report.

Some of the sports company’s stores have now had to close again. At the end of September, 96 percent of all stores were still open, now it is only 93 percent. “If we were initially back on a growth path at the beginning of the fourth quarter, the current worsening of the pandemic in many regions of the world requires our patience and support again,” said CEO Kasper Rorsted.

Adidas seemed to be on the right track. Sales in the third quarter were just seven percent below the previous year at just under six billion euros. At constant exchange rates, the minus was three percent. In the previous quarter, sales had slumped by more than a third.

In addition, the group listed in the Dax earns money again. Between July and the end of September, Adidas generated a profit of 578 million euros. That is almost eleven percent less than in the same period in 2019. In the second quarter, however, the bottom line was a loss of 300 million.

“Our business recovered very well in the third quarter,” said Rorsted. The focus on a healthy inventory level, profitable sell-through and disciplined deliveries to partners have paid off. Inventories have fallen by more than half a billion euros, and the share of sales in e-commerce at full price has increased in double digits.

At the same time, the operating result increased by more than 1.1 billion euros compared to the previous quarter. That is the result of strict cost discipline. Adidas has thus met its forecast from the summer, but fared worse than local rivals Puma. The brand with the predator logo grew strongly in the third quarter.

EM sales fail

After all, the phase of greatest uncertainty seems to be over. At the beginning of the corona crisis, Rorsted had secured loans of three billion euros in order to survive a prolonged lull. 2.4 billion of this came from the state-owned development bank KfW.

The company announced that Adidas took half a billion euros of this in July. It has now been repaid including interest. The group redeemed the entire credit line in October. Instead, the company obtained loans from private banks and bonds.

For the fourth quarter, Rorsted expects a currency-adjusted sales decrease of up to five percent. The basis of comparison is strong because Adidas brought many products for the European Football Championship and for the Chinese New Year in stores at the end of last year. The European Championship was ultimately canceled, whether it will take place next year is open. In China, however, Rorsted expects growth.

The Dane also promises an operating profit of between 100 and 200 million euros. But that only applies if more than 90 percent of the shops stay open – and customers shop as usual.

More: Mushroom leather instead of kangaroo: Adidas wants to help eco-shoes achieve a breakthrough

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