Adidas Sees Some Growth in Q4, But Full Year Slides to Negative

Adidas reported sales rose 1 percent to hit 5.55 billion euros in the last three months of a topsy-turvy 2020.

That meant the German sportswear brand finished the year 14 percent down, in currency neutral terms, with sales of 19.84 billion euros in 2020, compared to the 23.64 billion euros it made in 2019.

Income before taxes plummeted 77.5 percent in 2020, going from 2.56 billion euros in 2019 to just 575 million euros in 2020. Nonetheless, results in Q4 were slightly better than analysts had predicted, and Adidas forecast a far brighter 2021.

The biggest winner in a year significantly impacted by the COVID-19 pandemic was Adidas’ e-commerce, which saw triple-digit growth before stabilizing, the company said. Growth came to 53 percent for the whole year, generating well over 4 billion euros in sales.

The final outcome in various territories reflected the pace of the pandemic, as certain areas opened or closed depending on lockdowns. Europe was worst impacted in the fourth quarter, with net sales falling 6.2 percent, in currency neutral terms, to reach 1.3 billion euros. For the whole year, European sales were down 11.9 percent to 5.32 billion euros.

North American net sales rose 2.2 percent to reach 1.4 billion euros in Q4 and Asia-Pacific sales rose 1.4 percent to hit 1.92 billion euros. In Asia-Pacific, customers in mainland China drove growth, the company said, adding 7 percent to the territory’s Q4 sums. Even though Greater China was one of the first areas to recover from the lockdown, net sales for all of 2020 fell 17 percent.

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Because of the differences between Greater China and the rest of the Asia-Pacific region, Adidas announced plans to report these figures separately from 2021 onwards.

Mild growth in Q4 wasn’t enough to improve figures for the full year: North American net sales were down 8.6 percent, in currency neutral terms, for 2020 and totaled 4.76 billion euros. Net sales in Asia-Pacific dropped 17.3 percent to make 6.55 billion euros for Adidas.

The only territory in which Adidas saw significant growth was in the far smaller territory of Russia and surrounding post-Soviet nations. In the fourth quarter, sales there grew 21 percent, currency neutral, to hit 139 million. It was the only territory to see any growth over the year, with a minimal rise of 0.1 percent, currency neutral, that totaled net sales worth 584 million euros.

Adidas’ troubled younger sibling brand, Reebok, did not fare much better. In February, Adidas announced plans to sell the smaller brand. Over the fourth quarter, Reebok’s net sales fell 5.2 percent, currency neutral, to 406 million euros. Reebok’s full year ended with a drop in net sales, currency neutral, of 16.1 percent to total 1.4 billion euros.

Adidas predicted that, until 2023, it would be bearing the costs of setting up the underperforming brand, bought 15 years ago, as a standalone concern.

In its statement announcing the results, Adidas also offered an optimistic prognosis for the coming year. With most Adidas stores around the world now open again, it expects sales to recover “at a mid-to-high-teens rate” and its income to rebound. The company will release further information on its next five-year strategy and its financial ambitions at a meeting for investors and meeting later today.

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