Adidas Soars 8% on Strong Guidance as China Sales Explode 156% Despite Calls for Boycott
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Shares of Adidas (OTC: ADDYY) are up 8% in Germany today after the sportswear company upgraded its guidance following extremely strong Q1 results.
Adidas saw its sales rising by 20% to 5.26 billion euros ($6.35 billion) to top the analysts’ expectations of 5 billion euros. Net income rose to 502 million euros, the company said. This compares with 26 million euros recorded a year ago.
“We are fast out of the gate in the first year of our new strategic cycle, with excellent revenue growth, DTC-led sales increases in all market segments and strong profitability improvements,” said adidas CEO Kasper Rorsted.
Rising sales were mainly boosted by robust demand for Adidas’ products in China, where revenue grew by 156%. This is despite calls for boycott against Western companies that have voiced their dissatisfaction against the treatment ethnic and religious minorities in the Xinjiang region.
Rorsted told CNBC that he still expects “very strong growth” from China for the year overall.
“So, we are still very confident we will continue to build our position in China, which is the single biggest market for us. This is of course a sensitive topic and we are doing whatever we can to make sure human rights are protected.”
Adidas upgraded its full-year sales guidance to a growth recorded in a high-teens rate, higher than the expected growth of a mid to high teens rate, communicated earlier. For Q2, the company expects a jump in sales of around 50%.
“We upgrade our full-year outlook as we are now even more confident about a strong top-line recovery this year, even though the environment is not yet back to normal. Our strategy ‘Own the Game’ is off to a great start and 2021 will be an important first step in successfully executing against our 2025 ambition,” Rorsted added.
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