Adidas sales harmed by Russia-Ukraine crisis, saved by growth in China

Adidas reportedly on Wednesday saw a 10% increase in its shares despite COVID-19 disruptions in Vietnam and the closure of activities in Russia, with a brighter stance in China saving the day. Due to the ongoing war situation, the company was forced to shut down both online and offline operations across its 500 stores in Russia, accounting for one-quarter of its total stores.

On the other hand, with the pandemic on the wane, the German sportswear company anticipates an 11-13 percent increase in global sales, with the business relying heavily on Greater China for revenue.

According to Kasper Rorsted, the CEO of Adidas, the pandemic caused a product shortage due to the closure of factories in Vietnam which is poised to impact first-quarter sales by USD 658 million. He further added that the company anticipates a rebound in the second quarter.

As per reports, the Ukraine crisis has put nearly USD 276 million in sales at risk, accounting for half of the company's revenue from the country in 2021 and 1% of global sales.

Adidas' CFO, Harm Ohlmeyer, mentioned that before the crisis, the supplier had made nearly USD 110 million in sales and had predicted to increase revenue by the same number of operations in Russia were to resume soon.

In China, the shoe giant's fourth-quarter sales in 2021 fell by 24 percent, but it expects to pick up the pace with the onboarding of local athletes and the introduction of new designs to compete with local players.

It is worth noting that several western brands, including Adidas, have been boycotted by Chinese consumers who blame the companies for not sourcing cotton from Xinjiang following reports of human rights violations in the region, which affected the revenue numbers to a great extent. However, Beijing denied any allegations.

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https://money.usnews.com/investing/news/articles/2022-03-09/adidas-expects-russia-hit-in-2022-but-china-recovery