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In the last quarter of 2020, Adidas recorded a slight growth, leading the Germans to expect a strong rebound in the coming year. An ambitious five-year plan should support this growth.
Double-digit growth in 2021
Adidas recorded sales of 5.55 billion euros in the past fourth quarter (excluding exchange rate effects), which equals a 1 % increase. Analysts had only expected sales of 5.47 billion euros, according to MarketWatch. All markets, except the European ones due to ongoing lockdowns, recorded growth. Operating profit did fall in that quarter, from 245 million euros to 225 million euros. The operating margin remained almost stable at 4.1 %.
For the full year, net profit plummeted 78 % to 432 million euros, while sales dropped 16 % to 19.8 billion euros. E-commerce accounted for a fifth of this, rising by 53 % to over four billion euros. Flagship Adidas itself saw sales drop by 13 %, while turnover at Reebok – which will be removed from the accounts in the first quarter – fell by 16 %.
Nevertheless, the sports group is optimistic about the future. The eponymous main brand expects sales to increase in all regions by 2021, with China, Latin America and Asia-Pacific as frontrunners. Total sales should grow by as much as 15 to 20 %, leading to an operating margin increase to 9 to 10 % and a net profit ranging between 1.25 and 1.45 billion euros.
Five-year plan “Own the Game”
Adidas also announces a new five-year plan: under the headline “Own the Game”, the group aims to increase sales by 10 % annually until 2025. The German sportswear manufacturer wants to double e-commerce sales and aims to use twice as many sustainable materials. That should result in a profit increase of no less than 18 % annually.
Direct sales to consumers are expected to support the goal: they should generate 80 % of revenue growth from direct-to-consumer activities, and should account for around half of all sales by 2025. CEO Rorsted also wants to focus more on innovation, products for women and sustainability. In five years, nine out of ten items must be sustainable in some way.
