Adidas earnings slammed by virus, online sales picking up

Uncategorized

FILE – In this file photo dated Wednesday, Dec. 25, 2019, New Orleans Pelicans forward Derrick Favors wears Christmas-themed Adidas Pro Model Superstars shoes in the first half of an NBA basketball game Wednesday, Dec. 25, 2019, in Denver, USA. Sports apparel and shoe company Adidas said Tuesday April 14, 2020, it has been approved by the German government for a 3 billion-euro ( US dollars 3.3 billion) emergency loan to help the company get through a period of lost business due to the COVID-19 coronavirus outbreak. (AP Photo/David Zalubowski, FILE)

This is an archived article and the information in the article may be outdated. Please look at the time stamp on the story to see when it was last updated.

FRANKFURT, Germany (AP) — Sports apparel and shoe company Adidas saw its earnings fall sharply in the first quarter as the virus outbreak closed 70% of its global store base. Net profit from continuing operations fell 97% to only 20 million euros from 631 million euros in the same period a year ago.

The company, based in Herzogenaurach, Germany, said Monday that first quarter revenues fell 19% in currency neutral terms. E-commerce did pick up as the outbreak shutdowns spread in March, rising 55 percent in March and was continuing to climb.

“Our results for the first quarter speak to the serious challenges that the global outbreak of the coronavirus poses even for healthy companies,” said adidas CEO Kasper Rorsted.

Revenue development reflected the phasing of the global outbreak, with a sales decline of 58% in China, where the outbreak started, followed by downturns elsewhere.

The company said it had incurred costs in the three-digit millions over product take backs to manage inventory. It said its revenues were recovering in China during the first three weeks of April after the quarter ended, and global e-commerce revenues were showing another significant acceleration.

However, store closures in Europe, North America, Latin America, emerging markets, Asia-Pacific and Russia and the former Soviet Union mean that revenue development remained “severely impacted.”

The company said the situation regarding the outbreak was so uncertain that it could not provide an outlook for earnings for the full year.

CEO Rorsted said in a statement that “despite the current situation, I am confident about the attractive long-term prospects this industry provides for Adidas. Consumers are developing an increased appreciation of well-being. They want to stay fit and healthy through sports.”

He said that the company’s focus on accelerating its own retail and e-commerce businesses “will serve us even better in the future. We are well positioned as a global company with strong brands.”

Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Trending Stories