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Adidas Expects Strong Rebound, Takes Reebok Hit

Adidas Expects Strong Rebound, Takes Reebok Hit

Wednesday, 10 March, 2021 - 09:45
An Adidas shop is seen as the spread of coronavirus disease (COVID-19) continues in Berlin, Germany, April 20, 2020. (Reuters)

German sportswear maker Adidas AG predicted a strong rebound in sales in 2021, particularly in China, the rest of Asia and Latin America, although its profits will be trimmed by costs associated with divesting the Reebok brand.

The outlook for 2021 is part of a five-year strategy that Adidas is due to present on Wednesday.

Fourth-quarter sales rose a currency-neutral 1% to 5.55 billion euros ($6.59 billion), while operating profit slipped slightly to 225 million euros, ahead of the 5.47 billion and 202 million euros expected by analysts.

About half of its stores were closed in Europe in the period, but online sales grew 43%.

Now that more than 95% of its stores have reopened after lockdowns, Adidas expects sales growth at a mid-to high-teens rate on a currency-neutral basis in 2021, rising by up to 30% in greater China, the rest of Asia and Latin America.

Rival Puma said last month it expects the financial impact from lockdowns to last well into the second quarter, but believes global growth in running should help to support a strong improvement after that.

As part of its new strategy, Adidas will manage greater China as a separate market from the rest of Asia, and has integrated Europe, Russia and emerging markets into a new Europe, Middle East and Africa (EMEA) region.

For EMEA, Adidas expects sales growth in the mid-to high-teens, but only a high-single-digit rate in North America.

Net income from continuing operating is set to rise to between 1.25 billion and 1.45 billion euros.

However, Adidas said it expects a hit of around 250 million euros to the operating profit level and 200 million to net income due to costs to set up Reebok as a stand-alone company, with a third of that in 2022, but none in 2023.

Adidas said last month it plans to sell or spin-off the underperforming brand, 15 years after it bought the US fitness label to help compete with arch-rival Nike Inc.

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