Adidas AG is still benefiting from double-digit growth in China — but CEO Kasper Rorsted is wary that a currency war between Beijing and Washington could eventually harm its business.
The Germany-based athletic giant, which released its second-quarter earnings report on Thursday, noted that China drove a large chunk of its revenue gains during the period, rising 14% from the previous year.
During a conference call on Thursday, the Adidas chief said, “Having the two biggest economies in the world right now at odds with each other has a negative impact on both economies… If we have a currency war, that will be a situation where everyone loses.”
Early this week, President Donald Trump accused China of engaging in currency manipulation after the Chinese government devalued the yuan to below its 7-to-1 ratio with the United States dollar for the first time in a decade. Investors expressed worries that the U.S. could respond by knocking down its own dollar, which could trigger a currency war and weaken the spending power of American shoppers.
China’s move came on Monday, following Trump’s sudden announcement last Thursday of a 10% tariff on an additional $300 billion worth of Chinese goods. It marked the end of a temporary truce between the two world leaders in their yearlong trade war.
Rorsted, however, added that the athletic firm expects a “milestone year” on China’s solid performance as well as Reebok’s turnaround. (The exec continued to reiterate his goal to return the brand to profitability by 2020.)
For the quarter, Adidas posted profits of 531 million euros (nearly $595 million) — a 34% climb from last year. Revenues rose 4.7% to 5.5 billion euros ($6.16 billion). E-commerce served as a bright spot for the company, increasing 37%.
As of 11:00 a.m. ET, Adidas’ stock was down 4.8% to $147.70.
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