Adidas posts strong recovery in Q3 but fears further COVID-19 hit

Adidas reported an operating profit improvement of more than €1.1billion, compared to the last quarter (Q2), as it continues to recover from the COVID-19 pandemic’s financial impact on the company.

The German Sportswear brand giant recorded “strong sequential revenue improvement in the third quarter” as 90% of the company’s own-retail stores were open and working, where most of them were closed during the first wave of the pandemic which hard hit the last quarter.

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According to SportsProMedia, revenues for three months ending 30th September, slightly decreased 7% to €5.964 billion compared to €6.410billion made in the same time last year.

Third-quarter net income attributable to shareholders declined 15.5 percent to 546 million euros from last year’s 646 million euros.

“We saw a strong recovery in our business in Q3. Our focus on healthy inventories, profitable sell-through and disciplined sell-in clearly paid off: inventories declined by more than half a billion euros and our full-price share in e-com increased at a double-digit rate,” the company said.

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For e-commerce, Adidas saw a gain of 51% on a currency-neutral basis, the gain was accompanied by a strong increase in full-price sales. Its direct-to-consumer business advanced 13% in currency-neutral terms, accounting for 35% of total sales in the quarter. Its wholesale business climbed “sharply” but was still below that of last year.

Market segments showed a sequential recovery compared to the second quarter, where sales in Russia increased by 11%, sales in Europe also increased by 4%.

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However, amidst fears of a second wave of the pandemic, the fourth quarter is forecasted to decline. There are uncertainties around the further development of the coronavirus pandemic. With surging numbers of Coronavirus cases in several of its major markets, there are new lockdown measures.

Overall, the company’s top line is predicted to develop similarly in Q4 as it did in Q3, implying a low-to mid-single-digit currency-neutral revenue decline.

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“At the same time, we kept costs under control and delivered a profit improvement of more than € 1.1 billion compared to Q2,” said Adidas CEO Kasper Rorsted. “Our teams around the globe drove this improvement with dedication and passion. As the coronavirus pandemic is unfortunately far from being over, it remains our top priority to keep everyone healthy and safe.“