German sportswear group Adidas said on Friday it roared out of the 2021 starting blocks with a 20 per cent rise in first-quarter sales as profits returned to near pre-pandemic levels.
The COVID-19 crisis had pushed earnings down by three-quarters last year although the Bavaria-based firm still forecast a strong growth path for the coming four years.
For the period from January to March, Adidas said quarterly net profit hit €558 million, up from €31 million a year earlier, while sales came in higher than analysts’ expectations at €5.3 billion.
As a result, the arch-rival of US apparel giant Nike was “adjusting our forecasts upwards for the whole of 2021,” chief executive Kasper Rorsted said in a statement.
Adidas had said in February it was looking to sell off its struggling US subsidiary Reebok as part of a five-year turnaround plan. But the first-quarter performance put group profits back on track towards pre-pandemic levels: in the first quarter of 2019, net profit had amounted to €632 million.
Last year saw the bulk of the group’s stores forced to shut owing to virus-related restrictions. But strong e-commerce – online sales were up 43 per cent on the same period last year – and direct-to-consumer sales have helped it bounce back.
Last year saw the bulk of the group’s stores forced to shut owing to virus-related restrictions. But strong e-commerce – online sales were up 43% on the same period last year – and direct-to-consumer sales have helped it bounce back
Sales are expected to advance across the year as a whole by around 20 per cent, while underlying net profit was project to reach €1.25-1.45 billion after €460 million last year. That figure includes €200 million set aside for the cost of divesting Reebok.
Adidas also said an acceleration in sales “will be fuelled by an array of innovative product releases”, as major events such as the delayed football European Championships take place in June-July.
Sales in China, which plunged a year ago as the virus fallout battered the global economy, roared back by 156 per cent, while US and European sales were up around eight per cent as around half of stores remained closed as a result of the pandemic.
Looking ahead, Adidas confirmed its previous guidance for 2021 as a whole with the operating margin – which measures underlying profit as a proportion of sales – expected to rise to 9 to 10 per cent.