Adidas Shares Fall After 2021 Guidance Upgrade -- Update
05 Agosto 2021 - 05:56AM
Dow Jones News
By Kim Richters
Shares in Adidas AG traded lower on Thursday after the German
sporting-goods company raised its targets for sales and
profitability for the year, an upgrade that had been expected
according to analysts.
At 0832 GMT, Adidas traded 4.2% lower at EUR322.05.
On the back of second-quarter results that beat expectations,
Adidas said Thursday that it now expects currency-neutral sales to
grow up to 20% on-year in 2021, which compares with previous
company guidance of a high-teens growth rate. It targets an
operating margin of 9.5%-10%, slightly up from 9%-10% prior, and
guided for net income from continuing operations of EUR1.4
billion-EUR1.5 billion for the year, versus a target of EUR1.25
billion to EUR1.45 billion previously.
"FY21E guidance raise is modest (perhaps conservative) with
sell-side consensus expectations largely there already," said Piral
Dadhania, analyst at RBC Capital Markets.
Analysts at Citi said the modest guidance upgrade could reflect
continuing uncertainty related to the coronavirus pandemic and
pressures in China. While they see revenue guidance in line with
consensus expectations, Adidas's profitability outlook could lead
to estimates being upgraded by a low-single digit percentage, they
said.
As for Adidas's second quarter, sales of EUR5.08 billion beat
estimates of EUR4.97 billion and operating profit of EUR543 million
was ahead of expectations of EUR480 million, according to consensus
forecasts provided by FactSet. The company said Thursday that group
sales grew 52% compared with the same period a year earlier and
increased strongly in all regions except greater China, where they
fell 16%. Adidas was one of several fashion companies that faced
backlash in China earlier this year over their stance on cotton
produced in the Xinjiang region.
"From a channel perspective, the company's top-line increase was
characterized by a strong recovery from the material revenue
decline in its physical distribution channels during the second
quarter of 2020, when the global coronavirus pandemic had caused a
very large number of temporary store closures," said Adidas.
Wholesale revenue and sales in the company's own-retail stores
grew at a high-double-digit rate, while e-commerce revenues fell
14% in the three-month period.
Write to Kim Richters at kim.richters@wsj.com
(END) Dow Jones Newswires
August 05, 2021 04:47 ET (08:47 GMT)
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