Adidas has lowered expectations for 2022 following a sharp drop in sales in the first quarter of the year, with Covid-19 lockdowns in China impacting the sportswear giant’s bottom line.
First-quarter currency-adjusted sales dropped by 3% globally to 5.3 billion euros ($5.58 billion), with profit from continuing operations falling by 38% to 310 million euros.
Sales in China slumped, dropping 35% in the first quarter; with pandemic measures resulting in store closures and reduced consumer activity.
Prior to the latest developments Adidas had projected an 11-13% increase in sales with net income from continuing operations of between 1.8 and 1.9 billion euros. The company says that the lower end of these forecasts is still achievable, dependent on how things play out in China over the coming weeks and months.
Adidas also reduced its operating margin forecast, saying it will maintain the previous year’s level of 9.4% instead of a previously-planned increase to 11%.
“In this environment, characterized by severe external challenges, it is imperative to stay focused on our strategic objectives,” said Adidas CEO Kasper Rorsted.
“While we will remain agile, we will not jeopardize our long-term growth opportunity for short-term profit optimization.”
The company expects a return to growth through the second quarter despite the situation in China having a continued impact on sales as well as causing supply chain issues.
Net sales are expected to grow over 20% through the second half of the year, with major sports events such as the World Cup in Qatar driving consumer demand.