Adidas Targets Faster Sales as Pandemic Segues to Normality

(Bloomberg) -- Adidas AG forecast sales will bounce back near 2019 levels as the German sports apparel maker seeks to move past the pandemic and embarks on a new five-year strategy.

• Currency-neutral sales will grow by a percentage in the mid to high teens, driven by strong demand in Asia and Latin America, the German company forecast Wednesday. Analysts are expecting 22.7 billion euros of revenue ($27 billion), compared with 19.8 billion euros in 2020.

Key Insights

• Chief Executive Officer Kasper Rorsted will roll out his first five-year strategy for the company later Wednesday. Investors are expecting a heavy emphasis on e-commerce and sustainability measures.
• The planned divestment of Reebok will weigh on Adidas’s earnings for the next two years, with the “stranded costs” associated with shared offices, warehouses, staff and IT amounting to 250 million euros on the operating profit level this year and perhaps 75 million euros in 2022. That should be eliminated by 2023, the company said.
• Rorsted has drawn praise for his ability to streamline operations over the years, but now he has to show that he can be an industry leader driving revenue growth with new and exciting sneakers and apparel.
• Adidas has yet to fully capitalize on its increasing popularity among younger shoppers, according to John Kernan of Cowen. It’s still chasing rival Nike Inc. in that segment, and it faces increasing competition more broadly from upstart brands like Brooks Sports Inc., On AG and a resurgent Under Armour Inc.

Market Performance

• The shares rose as much as 2.4% in early Frankfurt trading. The stock has gained about 27% in the past year, but remains below pre-pandemic levels.

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