Adidas eyes strong recovery after 2020 plunge during pandemic

FRANKFURT AM MAIN: German sportswear group Adidas said Wednesday the pandemic sent its earnings plunging 78 percent last year but it is expecting strong profit growth in the next four years.

The Bavaria-based company, which is trying to sell its struggling US subsidiary Reebok, reported its net profits fell to 432 million euros ($513 million) last year from 1.97 billion euros in 2019.

It also had a 16 percent sales drop to 19.8 billion euros.

But the sportswear group is expecting a strong rebound in 2021, predicting that its net profit from continuing operations will grow an average of “between 16 and 18 percent per year over the four-year period between 2021 and 2025”.

Sales are also seen rising by between eight and 10 percent a year, if exchange rate effects are not taken into account, over the four years.

Adidas underlined that sales recovered in most of the world in the fourth quarter of a year in which many of its stores were forced to shut due to Covid-19 restrictions. The exception was Europe, where around half of the company’s stores were still closed by the end of the year, Adidas said in a statement.

Sales of the flagship Adidas brand sunk by 13 percent in 2020, while Reebok sales dropped 16 percent.

Last month Adidas said it will sell Reebok, which it acquired in 2006 for 3.1 billion euros with the aim of taking on US rival Nike.

Reebok struggled to shine under its German owner, despite high-profile collaborations with the likes of Victoria Beckham, Cardi B and Ariana Grande in recent years. Adidas has launched a formal process to divest itself of Reebok, and the company’s five-year growth strategy presented on Wednesday excluded the brand.

One silver lining in the year of shuttered stores was that online sales soared 53 percent to four billion euros — more than a fifth of total sales.

This boom is expected to continue — with the group predicting its e-commerce business is also forecast to double to between eight and nine billion euros in the next four years. With 95 percent of its stores now open across the world, Adidas “will be fast out of the gate” in 2021, chief executive Kasper Rorsted said in the statement. Adidas forecast net profits of 1.25-1.45 billion euros in 2021. It also proposed to pay shareholders a dividend of three euros per share.