Adidas has seen its profits evaporate in its first quarter, plummeting by 97 %. Turnover fell by 19 %, but a drop twice as big is expected for the second quarter.
Adidas had a particularly difficult first quarter: the sportswear label reported a 19 % drop in net sales, mainly because 70 % of all stores worldwide were closed due to the corona pandemic. Revenue therefore dropped to 4.75 billion euros.
Net profit evaporated almost completely, and decreased by 97 % to 26 million euro. For the rest of the year, the sports brand with the stripes does not dare to make any predictions, as there is still too much uncertainty about the duration of store closures.
"The only channel that has remained fully operational in most parts of the world", as Adidas itself refers to e-commerce, did increased by 35 %. Still, that was not nearly enough to compensate for the losses incurred in physical stores. To bear the financial consequences of Covid-19, Adidas already received three billion euros in state aid from the German development bank.
Second quarter worse
In the second quarter, the German company even expects that the decreases in "both top- and bottom-line" will be "more pronounced than those recorded in the first quarter": sales are expected to fall by as much as 40 % in the second quarter, as the full impact of the corona crisis will only then be felt.
In the medium term, however, CEO Kasper Rorsted sees an improvement for the sports industry, due to an increasing global focus on health and fitness. When people are allowed to go outside again, the urge to exercise will be great, Rorsted told CNBC.