BERLIN: Global supply-chain issues dampened the German sportswear giant Adidas third quarter results, with the company revising down its estimated gross profit margin for the year on Wednesday.
The company “performed well in an environment characterised by severe challenges on both the supply and demand side”, Adidas CEO Kasper Rorsted said in a statement.
Difficult market conditions in China and lockdowns in the Asia-Pacific region, leading to the closure of factories in Vietnam for several weeks, as well as global supply chain disruptions, reduced the revenues in the third quarter by 600 million euros ($694 million), the group estimated.
The revenues between July and September reached 5.8 billion euros, up 3 per cent on the same period last year and with the brand still on course to increase their overall sales by 20 per cent in 2021.
The growth in revenues, as well as net profit and the company’s operating margin, a measure closely watched by investors, would “come in at the lower end” of the company’s estimates for the year on the back of disruptions.
At the same time, Adidas lowered its gross profit margin expectations in between 50.5 per cent and 51 per cent from 52 per cent previously “due to significantly higher supply chain costs, as well as a less favourable market mix”.
In August, Adidas agreed the sale of the ailing sportswear maker Reebok to the American company Authentic Brands Group for 2.1 billion euros.
The German group recorded a one-off positive effect of 402 million euros; following the deal, bumping its total net profit to 960 million euros for the quarter.
The Reebok sale to one side, Adidas booked a net profit of 479 million euros in the third quarter on its continuing operations, down 10.4 per cent on a 535 million euros profit in the same period last year.