In the second quarter, Adidas Ag reported currency-neutral sales growth of 55 percent. E-Commerce revenues declined 14 percent in the quarter, while in euro terms, the company’s revenues grew 51 percent or more than 1.7 billion euros to 5.077 billion euros.
The company said in a release that this growth was achieved against the background of the geo-political situation as well as extended lockdowns in the Asia-Pacific region, which in combination reduced currency-neutral revenue growth by a low-double-digit rate during the quarter.
“With sports taking back center stage this summer, we delivered a very successful quarter. Driven by the strength of our brand and better-than-expected demand for our products, we saw an acceleration in our top- and bottom-line,” said Adidas CEO Kasper Rorsted, adding, “This momentum gives us all the confidence to increase our full-year outlook despite the external challenges that our industry continues to face.”
Adidas reports strong double-digit growth across market segments
The company added that the top-line expansion in the second quarter was driven by increases in all market segments except Greater China. Currency-neutral sales in EMEA increased 99 percent and North America, 87 percent versus the prior year’s period, reflecting strong double-digit growth versus the 2019 level.
Revenues in Latin America rose 230 percent, which more than tripled during the quarter, and sales in Asia-Pacific grew 66 percent despite the negative impact from the extended lockdowns in the region. In Greater China, revenues declined 16 percent during the three-months-period.
Adidas operating margin improves to 10.7 percent The company’s gross margin increased 0.5 percentage points to 51.8 percent, while the company’s operating profit reached a level of 543 million euros compared to negative 263 million euros in 2020. With an improvement of 18.5 percentage points to 10.7 percent, the operating margin almost fully recovered to the pre-pandemic level.
The company’s net income from continuing operations improved by more than 600 million euros to 387 million euros and basic EPS from continuing operations reached 1.93 euros compared to negative 1.13 euros in 2020.
Adidas posts strong bottom-line growth in the first half
In the first half of 2021, revenues increased 40 percent on a currency-neutral basis driven by strong double-digit growth in all market segments. In euro terms, revenues grew 34 percent to 10.345 billion euros.
The company’s gross margin increased by 1.4 percentage points to 51.8 percent, while operating profit reached 1.248 billion euros compared to negative 215 million euros in 2020, resulting in an operating margin of 12.1 percent.
Net income from continuing operations reached 890 million euros, reflecting an improvement of more than 1 billion euros compared to the prior year level and basic earnings per share from continuing operations improved to 4.52 euros compared to negative 0.97 euros in 2020.
Adidas increases outlook for FY 2021
While Adidas continues to be impacted by Covid-19-related lockdowns, industry-wide supply chain challenges and the geo-political situation, the company has increased its top- and bottom-line outlook for 2021.
Given the accelerating top-line momentum, the company now expects currency-neutral sales to increase at a rate of up to 20 percent in 2021, driven by strong double-digit improvements in all markets. This new outlook reflects sales growth of up to 7 percent in the second half of the year compared to the 2020 level.
The company’s full-year gross margin forecast continues to be for a level of around 52 percent. The operating margin is now expected to increase to a level of between 9.5 percent and 10 percent (previously: 9 percent to 10 percent). Net income from continuing operations is now projected to increase to a level of between 1.4 billion euros and 1.5 billion euros compared to previous outlook of 1.25 billion euros to 1.45 billion euros.