China, Supply Chain Woes Impact Results at Adidas

After knocking its guidance down throughout last year, Adidas still had to settle for growth slightly lower than its own predictions. The company presented its full-year results on Wednesday morning.

Net sales over the course of 2021 grew 16 percent, currency neutral, to bring in 21.23 billion euros, or $23.3 billion at current exchange. The company had originally predicted between 17 and 18 percent growth.

The company’s sales revenues have not yet returned to pre-pandemic levels. In 2019, the last “normal” year before the COVID-19 health crisis began, Adidas made almost 24 billion euros.

In the fourth quarter, sales fell 3 percent in currency neutral terms to 5.14 billion euros.

“In 2021, we delivered a strong set of results despite several external factors weighing on both demand and supply throughout the year,” CEO Kasper Rorsted said in a statement.

Problems included an ongoing consumer boycott of Western-made goods in China, pandemic-related lockdowns and the resulting supply-chain issues, the company explained. This likely shaved around 1.5 billion euros off revenue growth during the year, it suggested. That included a loss of about 400 million euros in the fourth quarter alone.

Q4 sales in Greater China dropped 24.3 percent to 1.3 billion euros. The company recently appointed a new manager for the territory, with Adrian Siu, a former sales manager for Adidas Hong Kong, replacing Jason Thomas, who will return to Dubai, which is where he started with the company.

Over the whole year, Adidas sales in the Greater China territory grew 3 percent to hit 4.6 billion euros. In total, the Asia-Pacific region brought in 6.78 billion euros.

In Europe, sales grew 24 percent during 2021 to bring the company 7.76 billion euros. This was helped by a successful fourth quarter, during which sales in the Europe, Middle East and Africa grew 15.2 percent to 1.83 billion euros.

In North America, revenues rose 16.6 percent to 5.1 billion euros over the year. This was despite a difficult fourth quarter, when sales fell 3.7 percent to 1.3 billion euros.

“Revenues in North America were most impacted by the supply shortages in the fourth quarter,” Adidas noted.

The company’s operating profit – or EBIT, earnings before interest and taxes, which indicate the profitability of a company’s core business – rose 166.3 percent over the course of 2021 to 1.98 billion euros.

This article originally appeared on WWD.com.

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