Adidas says the worst is yet to come after plummeting sales and quarterly earnings | ECONOMY

Adidas warned it will take an even deeper hit to second-quarter sales and profits due to coronavirus lockdowns, after reporting worse-than-expected first-quarter results, saying it had yet to see a full rebound in China.

The sportswear manufacturer reported that 60% of its business was currently paralyzed, with more than 70% of its stores closed worldwide.

E-commerce sales, which accounted for 13% of the total last year, are growing rapidly, particularly in China, but not enough to offset lost store sales.

As Adidas stores reopen in China, customers have returned, but they haven’t been buying as much as before the crisis, the chief executive said, Kasper Rorstedwho added that he only expects a full recovery by the end of the second quarter.

“We are not going to see an imminent return to what we had before”, he maintained, but would not comment on the trends he has seen in the 20 stores that reopened in Europe last week.

One bright spot is that the pandemic is increasing interest in fitness and health, he said. rorstedwhich mentioned record sales of yoga mats while people exercise at home.

adidaswhich was forced to suspend dividend payments as a condition of a government-backed loan this month to ride out the crisis while it burns cash, said it would replace that credit with other financial vehicles as soon as possible.

The firm warned of a possible 40% drop in second-quarter sales and a fall in operating profits in that period of more than 100 million euros. rorsted it said it had already lost more than 1 billion euros ($1.1 billion) of sales in April.

First-quarter operating profit fell to 65 million euros, well below the 263 million expected by analysts, while sales fell 19% to 4.75 billion euros versus 4.85 billion analysts, according to Eikon data from refinitiv.

The actions of adidas they have fallen by more than a third since the coronavirus pandemic began.