Darker and darker clouds are brewing over the sporting goods and clothing manufacturer Adidas. Due to partly home-made problems in China, sluggish demand in many countries and rising costs, Adidas lowered its business forecast for 2022 for the third time.
The head of the group, Kasper Rorsted, who will leave office at the latest in the coming year, will leave his unknown successor with a house with many construction sites. According to experts, the forecast, which has been lowered again, puts pressure on the supervisory board to soon present a new boss.
Business in China is worrying
The share price, which was weak in any case, slipped to 105 euros and thus the lowest level since spring 2016. The Adidas share is now a long way from the record high of more than 336 euros in August 2021.
Adidas continues to worry about the China business, in which the group is very heavily involved. On the one hand, the German manufacturer, like its competitors Nike and Puma, is struggling there with the government’s strict corona policy, which is putting a strain on consumption. However, Adidas had also made its own mistakes in the country and thus opened up the field for domestic companies, as Rorsted had admitted in the “Handelsblatt” in the summer.
Effects of the energy crisis
Added to this are the sharp rises in energy prices in many Western countries, which are causing consumers to buy fewer consumer goods that they do not urgently need. This all led to a weak third quarter for Adidas.
The Adidas management now only expects a profit of around 500 million euros in the continued operations for 2022, as was surprisingly announced on Thursday after the stock market closed. The forecast had previously been around 1.3 billion euros. In terms of sales, the group expects a currency-adjusted increase in the mid-single-digit percentage range for 2022. Last year there was an increase of 16 percent to 21 billion euros.
Operating profit should only reach four percent of sales – instead of seven percent, as previously thought. At the beginning of the year, Adidas had aimed for significantly higher increases in margin and sales.
Looking for a new CEO
Rorsted’s departure was announced in August. There is no successor yet. The search had “begun,” it said about two months ago. The Dane will continue to hold office for as long.
The manager has been running Adidas since 2016. He came from the Düsseldorf consumer goods group Henkel. There he was known for his restructuring successes and his focus on returns. At Adidas, he heralded a change in strategy, sold the Taylormade, CCM Hockey and Reebok brands and concentrated the group entirely on the Adidas brand. Critics repeatedly accused him of choking off creativity in the group. Adidas has recently missed some trends and made competitors strong.
