German sportswear maker Adidas expects a strong recovery in sales this year led by the Chinese market, though profit will be trimmed by costs associated with divesting its Reebok brand.
While presenting its 2021 outlook as part of its five-year strategy, Adidas said it has reopened 95 percent of its stores after coronavirus lockdowns and expects 2021 sales growth rate to rise as much as 30 percent in greater China, the rest of Asia and Latin America.
Adidas rival Puma, also from Germany, said last month that it expects the financial impact from lockdowns to last well into the second quarter but that pandemic-driven growth in running should help to support a strong improvement after that.
As part of its new strategy, Adidas will manage greater China as a separate market from the rest of Asia and it has integrated Europe, Russia and emerging markets into a new Europe, Middle East and Africa (EMEA) region. For EMEA, Adidas expects sales growth in the mid-to-high teens, but only a high single-digit percentage in North America.
However, Adidas expects a hit of about $250 million to operating profit from costs to make Reebok a standalone company, with a third of that in 2022 but none in 2023.
eCommerce and sustainability
Adidas will invest more than $1 billion in the company’s digital transformation and aims to make nine out of 10 products more sustainable by 2025, using more recycled and biodegradable materials.
CEO Kasper Rorsted said eCommerce will account for more than 40 percent of the industry’s sales by 2025, with online growing three times faster than offline, adding that more than 70 percent of consumers say sustainability is an important consideration when making a purchase.
Adidas last month said that it plans to sell or spin-off the underperforming brand, 15 years after it bought the US fitness label to help it compete with arch-rival US-based Nike.