By Joshua Kirby

 

Adidas AG said Tuesday that it expects sales growth and earnings to be lower in 2022 than previously forecast as recovery in the key Greater China market continues to be dragged by pandemic-related restrictions.

Given the restrictions, Adidas now expects Greater China sales to decline at a double-digit rate for the rest of 2022. It had previously guided for second-half revenue to be flat on year in the market. The company nevertheless still expects double-digit revenue growth for the company as a whole in the second half.

As a result of the China performance, the German sportswear giant now expects organic sales growth for 2022 to be in the mid- to high-single digits. It had previously guided to meet the lower end of a 11%-13% range.

The resulting less favorable geographic mix and measures to clear inventory in the market will drag the company's gross margin to a level of around 49% for the year, from a previous forecast of around 50.7%, it said. Consequently, the operating margin is expected to stand at around 7% for 2022, compared with the roughly 9.4% previously forecast, Adidas said.

Net income from continuing operations will as such reach around 1.3 billion euros ($1.33 billion), Adidas said, having previously been expected at the lower end of a EUR1.8 billion-EUR1.9 billion range.

 

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

 

(END) Dow Jones Newswires

July 26, 2022 12:34 ET (16:34 GMT)

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