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Benzinga

Adidas Shares Slide As China Lockdown Weighs On Q1 Earnings, FY22 Outlook

  • Adidas AG (OTC:ADDYYreported first-quarter FY22 sales growth of 0.6% year-on-year to €5.3 billion. Currency-neutral sales declined 3% as supply constraints reduced the top-line by €400 million.
  • Currency-neutral sales across North America rose 13%, EMEA improved 9%, and Latin America jumped 38%.
  • The challenging market environment and COVID-19-related lockdowns in Greater China and Asia-Pacific continued to weigh on the top-line development.
  • The gross margin for the quarter contracted by 190 basis points to 49.9% due to high supply chain costs.
  • The operating margin was 8.2%, and the operating income for the quarter was €437 million.
  • The company held €3 billion in cash and equivalents as of March 31, 2022.
  • Inventories increased 15% Y/Y to € 4.542 billion.
  • EPS was €2.55 versus €2.86 last year.
  • "In the East, we will return to growth in Asia-Pacific in the second quarter, while we expect the challenging market environment in Greater China to continue," said CEO Kasper Rorsted.
  • Outlook: Adidas sees FY22 currency-neutral revenue growth at the lower end of 11% - 13% due to new lockdowns in China.
  • The company expects an FY22 gross margin of about 50.7% (previously: 51.5% - 52.0%).
  • Price Action: ADDYY shares are trading lower by 4.40% at $95.00 on the last check Friday.
  • Photo Via Wikimedia Commons