Adidas Forecasts Growth Despite Factory Challenges
Adidas sources 28 percent of its products in Vietnam, which is in the middle of a lockdown until Aug. 22 due to rising COVID cases. The market’s current factory situation could impact Adidas’ Q4 footwear volume but will have “very little impact” on the company introducing new products during the holiday period.
Adidas is currently forecasting 7 percent topline growth in H2/FY21 and sees annual constant currency sales increasing up 20 percent with double-digit improvements in all markets. Senior management remains bullish about the North American market, which grew 87 percent in constant currency in H1 versus H1/FY20 and up 15 percent from H1/FY19.
“We’re very excited about our position in North America, and we continue to see great opportunities for growth,” commented Sebastian Steffen, head of investor relations for Adidas.
Much of that expansion is likely to come from larger retailers such as Dick’s Sporting Goods and JD with diminishing sales contributions from smaller wholesale partners.
“I’m definitely happy for every T-shirt and pair of shoes that we have in stock right now,” CFO Harm Ohlmeyer told analysts last week. “Demand is definitely not our issue at the moment. It’s the supply side of things, but we have been making great progress over the past few weeks in mitigating these impacts.”
Adidas worldwide sales rose 40 percent in constant currency in H1 to the equivalent of $12.12 billion. Growth was paced by running, outdoor and soccer. Outdoor sales more than doubled and soccer revenues increased more than 150 percent. The company ended H1 with year-over-year inventories down 22 percent.