German sportswear group Adidas expects a halt to its Russian operations due to the war in Ukraine to put up to 250 million euros ($273.1 million) of sales at risk this year, it said on Wednesday, but forecast a bounce in its China business.
The company said on Monday it had suspended operations in Russia – where it operates about 500 stores, a quarter of its total – including via its online shopping site.
Adidas forecast an 11-13 per cent increase in currency-neutral sales in 2022, including the risk to its business in Russia and Ukraine, with Greater China set to see sales increase in the mid-single digits after a consumer boycott in 2021.
Its shares opened up 7 per cent, helped by the relatively upbeat outlook for 2022, especially for China, with analysts noting the earnings forecast is ahead of consensus expectations.
“The tone appears more constructive here than Puma was a couple of weeks ago,” said Jefferies analyst James Grzinic.
Puma said last month it expected sales to grow at least 10 per cent in 2022 and cautioned that a consumer boycott in China and cost pressures would limit profit growth.
Adidas said the 250 million euros at risk from the Russia closures was about half of the company’s total revenue in the region and represented about 1 percentage point of growth for the total company.
It expects net income from continuing operations to grow to between 1.8 billion and 1.9 billion euros in 2022, up from 1.492 billion in 2021.
Adidas reported a 3 per cent fall in currency-neutral sales in the fourth quarter to 5.137 billion euros, dragged down by a 24 per cent fall in greater China, where it said on Tuesday it has appointed Adrian Siu as its new head of the regional business.
The company was targeted during a boycott of Western brands by Chinese consumers who criticised companies for saying they would not source cotton from Xinjiang after reports of human rights abuses there. Beijing denies any abuses.
- Reporting by Emma Thomasson; Editing by Paul Carrel, Miranda Murray and Jan Harvey, of Reuters.