While his boss, Kasper Rorsted, was dismissed this summer, against a backdrop of insufficient performance in China, where sales were doubly penalized by Beijing’s zero-Covid policy and the call for a boycott from local consumers, due to its refusal of cotton made by forced Uyghur workers, the German sports equipment manufacturer is also forced to relegate its used for the 2022 financial year to the sidelines. The announcement fell on Thursday evening, on the sidelines of the publication of the results preliminaries for the third quarter unanimously deemed disappointing.
At 6.4 billion euros, turnover increased by only 4% at constant exchange rates, against 6.57 billion expected by the consensus, while the gross margin crumbled by 1 point , at 49.1%, against 49.5% expected. Ebita (earnings before interest, taxes and amortization) fell by 16%, to 564 million, or a margin of 8.8%, down 2.9 points over one year. The origin of this poor performance is not hard to find: Greater China. At constant exchange rates, sales of the three-stripe brand have “ declined at a strong double-digit rate, reflecting continued widespread Covid-19 related restrictions as well as significant inventory reversals “, explains the German group.
In order to take into account a more cautious scenario for China, a reduction in inventories and various exceptional costs, particularly in Russia, management has slashed its expectations for 2022. It is now aiming for stable sales at designs constants, while he hopes for growth of the order of 5% to 10% previously. The gross margin should be around 47.5% in 2022 (compared to around 49% previously) and the operating margin around 4%, i.e. 3 points less than estimated so far.
The most spectacular decline is perhaps that of net income from continuing operations: from 1.3 billion, the forecast fell to 500 million euros. A few days before the kick-off of the FIFA World Cup in Qatar, Adidas takes a nice red card on the stock market, since the title unscrews by more than 7% on Friday morning. Since 1uh January, it loses almost 60% of its value.