Adidas Surges as China Growth Seen Offsetting Russia Setback

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Adidas Surges as China Growth Seen Offsetting Russia Setback
Credit: © Reuters.

By Dhirendra Tripathi – Adidas stock (DE: ADSGN ) soared 10% in Frankfurt trading Wednesday after the shoe and sports apparel maker forecast strong sales in 2022.

The company is expecting its China business to bounce back and help offset the loss of business in Russia. Overall margins are seen higher too with price hikes expected to have a role, according to Bloomberg.

Sales will grow by 11%-13% on a currency-neutral basis as demand for sneakers remains robust, the company said while disclosing its 2021 results.

Adidas expects Greater China sales to increase in mid-single digits, compared to the 3% growth last year when consumer boycott and a push for products made by local manufacturers hurt its sales. Adidas said on Tuesday that it had replaced the head of its Chinese operations, promoting Adrian Siu who also has experience in managing a local brand in China, namely fashion label Cosmo Lady.

Adidas said the war in Ukraine is putting as much as 250 million euros ($273 million) of revenue, or half of its business from Russia and the CIS region, at risk. That reflects the suspension of retail and e-commerce operations in Russia and represents about 1 percentage point of growth in total sales, according to the wire agency.

The company said on Monday it had suspended operations in Russia - where it operates about 500 stores, one-quarter of its total.

North America and Latin America are seen as the biggest sales drivers, with growth even going up to 19%, according to the company's projections. Europe, the Middle East, Africa, and Asia-Pacific are seen growing around 16%.

Adidas reported a 3% fall in currency-neutral sales in the fourth quarter to 5.14 billion euros, pulled down by Greater China.

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