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Adidas lowers 2022 expectations amid China lockdowns

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Adidas lowered expectations for 2022 after a first-quarter slump as renewed COVID-19-related lockdowns in Greater China proceed to hit the German sportswear company.

First-quarter currency-adjusted sales shrank by 3% worldwide, to five.3 billion euros ($5.58 billion), while cash in on continuing operations fell 38%, to 310 million euros, it said on Friday.

In Greater China, sales collapsed by 35% in the primary quarter; for the yr, revenue is anticipated to fall significantly attributable to store closures and powerful traffic declines.

The corporate now expects to are available in on the lower end of its 2022 forecast for an 11-13% increase in currency-neutral sales in addition to for net income from continuing operations of between 1.8 and 1.9 billion euros.

Adidas also cut its operating margin forecast, saying it’ll remain on the previous yr’s level of 9.4% as a substitute of accelerating to 11%.

“On this environment, characterised by severe external challenges, it’s imperative to remain focused on our strategic objectives,” said Chief Executive Kasper Rorsted.

“While we’ll remain agile, we won’t jeopardize our long-term growth opportunity for short-term profit optimization.”

The corporate expects a return to growth within the second quarter despite the continued sales decline in Greater China and a 200-million-euro negative impact from supply chain constraints.

Within the second half of 2022, net sales are expected to grow over 20%, driven, amongst other things, by unconstrained supply, strong momentum in Western markets and major sports events.

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