Adidas cuts 2022 outlook on slower China recovery and potential global slowdown

Pedestrians walk past a large Adidas logo inside the German multinational sportswear company.

Miguel Candela | SOPA Images | Light Rocket via Getty Images

Adidas on Tuesday lowered its financial forecast for 2022 as the sneaker and athletics brand suffers from a slower recovery in China and warned of the potential for a downturn in other markets.

The announcement comes a day after Walmart sent shockwaves through the retail sector by slashing its quarterly and annual profit forecast. Walmart said inflation is causing shoppers to spend more on necessities like food and less on items like clothing and electronics.

Adidas said on Tuesday it now expects revenue from Greater China to decline at a double-digit rate for the rest of the year, given widespread Covid-related restrictions in the region. He also said he will have to work to eliminate excess inventory through the end of the year, and those efforts will weigh on earnings.

It now expects the company’s total currency-neutral revenue to grow in mid-to-high single digits in 2022, compared to previous growth estimates of between 11% and 13%.

Adidas now expects its gross margin to be around 49% in 2022, down from the previous forecast of 50.7%, and net income from continuing operations to reach around $1.3 billion. euros, down from a previous range of 1.8 billion euros to 1.9 billion euros.

Adidas noted that while it has not experienced a significant slowdown in sales or major wholesale order cancellations in any other market, its adjusted outlook takes into account a potential slowdown in consumer spending globally. world.

More and more retailers are sounding the alarm bells, with inflation rising at the fastest rate in four decades. With consumers facing higher prices at the gas pump, grocery store and restaurants, some are more discerning about where they spend money and where they retire. Kohl’s, Gap, Bath & Body Works and Bed Bath & Beyond have issued profit warnings in recent weeks.

Find the full press release here.

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