German sportswear brand Adidas claimed on Thursday that it is expecting to bounce back from its disastrous second-quarter, when the company was forced to close the vast majority of its stores due to the pandemic.
Adidas reported an operating loss of €333 million during the second-quarter, which was worse than the forecasted €290 million set by analysts, with sales going down by 35% to €3.579 billion, marginally better than the forecasted €3.3 billion.
James Grzinic, an analyst from Jefferies, claimed that the decline in sales was much less than what was expected in Europe and North America, falling by 40% and 38% respectively.
The sales did not go down as much as expected mainly due to Adidas making use of ecommerce very strongly.
However, sales in Asia went down much more than expected, with sales going flat during the second-quarter in China, and then overseeing double-digit growth during May and June.
Around €250 million of the quarterly loss was down to charges related to COVID-19, having to increase its inventory and bad debt allowances, whilst also having to close down its stores.
The company’s inventories reached €5.2 billion by the end of June, which was an increase of 20% from the end of March.
As long as there are no additional major lockdowns, Adidas is expecting a significant improvement in third-quarter sales, but is still not hopeful of reaching the highs of 2019.
During the third-quarter, Adidas is expecting an operating profit between €600 million and €700 million, but it declined to provide an outlook for the whole year.
The company’s Chief Executive, Kasper Rorsted, stated that it is “now seeing the light at the end of the tunnel as the normalisation in the physical business continues”.
Ecommerce sales rose by a staggering 93% during the quarter, and have remained at relatively high levels even with stores opening up slowly, as 92% of stores are opening again, albeit with some of them operating at reduced hours.
Along with Adidas, competitors Nike and Puma also reported quarterly losses, yet Nike saw a 75% rise in online sales according to Reuters.