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Adidas forecasts strong top-line recovery in 2021

By Prachi Singh

7 May 2021

Currency-neutral revenues increase 27 percent at Adidas with footwear up 31 percent driven by double-digit gains in the training, running, outdoor and lifestyle categories. In euro terms, the company’s revenues grew 20 percent to 5.268 billion euros.

“We are fast out of the gate in the first year of our new strategic cycle, with excellent revenue growth, DTC-led sales increases in all market segments and strong profitability improvements,” said Adidas CEO Kasper Rorsted in a release, adding, “We upgrade our full-year outlook as we are now even more confident about a strong top-line recovery this year, even though the environment is not yet back to normal.”

Review of Q1 performance at Adidas

The company said, this growth was achieved against the backdrop of prolonged lockdowns in Europe and industry-wide supply-chain challenges, which reduced currency-neutral revenue growth by a high-single-digit rate during the quarter.

From a channel perspective, the company’s top-line increase was led by improvements in direct-to-consumer (DTC) revenues, which were up 31 percent and accounted for more than one-third of total sales and ecommerce growth of 43 percent.

The company added that across the company’s three strategic markets, currency-neutral sales expanded by 156 percent in Greater China and increased by 8 percent in both North America and EMEA. Revenues were up 18 percent in Latin America and increased 4 percent in Asia-Pacific.

Adidas reports profit in Q1

The company’s gross margin increased 2.1pp to 51.8 percent. The company’s operating profit grew to a level of 704 million euros and with an increase of 12.3 percentage points to 13.4 percent, the operating margin almost fully recovered to the pre-pandemic level.

The company’s net income from continuing operations increased to 502 million euros, while basic EPS from continuing operations reached 2.60 euros.

Adidas upgrades outlook

Given the healthy brand momentum and stronger-than-expected demand for the brand’s products, the company now expects currency-neutral sales to increase at a high-teens rate in 2021.

In Q2, Adidas forecasts a significant top-line acceleration, with currency-neutral sales expected to increase by around 50 percent. The company’s full-year gross margin forecast continues to be for a level of around 52 percent, while the operating margin is still expected to increase to a level of between 9 percent and 10 percent.

Net income from continuing operations is projected to increase to a level of between 1.25 billion euros and 1.45 billion euros.