German sports manufacturer Adidas said on Tuesday that sales and profitability recovered in the third quarter as shops reopened, alongside booming e-commerce sales, with a modest profit expected in the final quarter.
Adidas reported net profit of €546 million for the three months to September, down 15.5 per cent from €646 million in the same period of the previous year.
But this followed a damaging second quarter for the company, when it posted a €295 million loss on sales of €3.6 billion.
Third-quarter revenues fell seven per cent year-on-year to €6 billion, but beat expectations according to a survey by financial services provider FactSet, with e-commerce sales up 51 per cent.
“We saw a strong recovery in our business in the third quarter,” chief executive Kasper Rorsted said in a statement, but “a worsening of the pandemic in many regions of the world is again requiring our patience and support”.
The Bavaria-based company predicts its top line to “develop similarly in the fourth quarter as it did in the third”, with operating profit to be between €100 and €200 million.
The outlook, however, “assumes no addition major lockdowns”, and a store opening rate above 90 per cent. Adidas said 93 per cent of stores were open, down from 96 per cent at the end of September.
Major European markets including France and Britain have taken steps to shut stores to curb a second spike in coronavirus cases. At its most severe point in the spring, the pandemic closed 70 per cent of Adidas stores worldwide.
“We are now well-prepared to cope with these short-term uncertainties,” Rorsted said, with the company “better positioned to benefit from the long-term industry growth drivers accelerated by the pandemic such as health and wellbeing, athleisure and digitisation”.
The company [is] ‘better positioned to benefit from the long-term industry growth drivers accelerated by the pandemic such as health and wellbeing, athleisure and digitisation’- Adidas chief executive Kasper Rorsted
In the third quarter, traffic in stores continued to improve yet remained “significantly below prior year levels,” the company said.
Sales at the Adidas brand fell two per cent while at Reebok sales declined seven per cent, reflecting its dependence on the US market.
In China, sales fell five per cent compared with the second quarter after “initial pent-up demand faded,” the company said, but it expects business to return to growth in the final quarter. The Asian giant boosted second-quarter revenues after the country reopened earlier this year while much of Europe and the US was still under lockdown.