Adidas’ rebound in China is happening at a quicker pace than anticipated.
The Germany-based sportswear giant announced today that its sales in Greater China — its first major market “on the road to recovery” amid the coronavirus pandemic — turned positive in the month of May. It noted that the return to growth had happened earlier than expected, and it now anticipates second-quarter revenues in the region will match last year’s levels.
Since mid-April, all of Adidas’ owned and partner-operated stores have resumed business in the country. Late that month, CEO Kasper Rorsted warned investors that it could take several months for sales in China to bounce back to pre-coronavirus levels, with recovery being “gradual rather than instant.”
However, while store traffic in May was lower than that of last year, the company said that “targeted efforts to revitalize retail have led to sequential improvements since stores reopened.”
Today, about two-thirds of Adidas’ global brick-and-mortar fleet is at least partially open. Almost all of its owned outposts in countries within the Asia-Pacific region, as well as those in its emerging markets (Egypt, Jordan, Israel, Lebanon, Morocco and the United Arab Emirates), have reopened albeit at reduced hours. Roughly half of its locations in Russia and neighboring countries have also resumed operations, but opening rates in North America and Latin America are still “significantly below” 50%.
Considering such developments, Adidas did not project a change to its guidance for the second quarter. (It’s set to report Q2 earnings on Aug. 6.) On April 27, when it reported first-quarter financial results, the athletic brand predicted a decline of at least 40% in second-quarter sales and a more than 100 million-euro (or $112 million) drop in its operating profits.