Fabric Products,Fabric Information,Fabric Factories,Fabric Suppliers Fabric News Adidas encountered a crisis and asked for credit assistance. The inventory of closed stores increased sharply and there were crazy discounts online…

Adidas encountered a crisis and asked for credit assistance. The inventory of closed stores increased sharply and there were crazy discounts online…

During the epidemic, another global sports brand giant encountered a crisis. Yesterday, Adidas said , due to the spread of the new crown pneumonia epidemic around the world, the company had to close 70% of its …

During the epidemic, another global sports brand giant encountered a crisis.

Yesterday, Adidas said , due to the spread of the new crown pneumonia epidemic around the world, the company had to close 70% of its stores around the world, resulting in a 19% drop in net sales in the first quarter to 4.753 billion euros compared with the same period last year; operating profit dropped to 6,500 euros and high operating costs Costs caused the company’s net income to drop 96% year-on-year to 26 million euros.

Although the company has received 3 billion credit assistance and has taken comprehensive countermeasures to stop losses, the company is still There are over 1.6 billion euros of inventory waiting to be sold.

Net profit plummeted 96% in the first quarter

Sales in Greater China fell by 58%

On April 27, the German sportswear giant Adidas released the latest data. Affected by the COVID-19 epidemic, the company’s net sales in the first quarter fell 19% from the same period last year to 4.75 billion euros. Among them, Adidas brand sales fell by 20.1% and Reebok brand sales fell by 11.4%. ; while operating profit plummeted 93% year-on-year to 65 million euros; net income dropped 96% year-on-year to 26 million euros.

The only good thing is that as the only channel that remains fully operational in most parts of the world, Adidas’ e-commerce The business still maintained a growth of 35% excluding exchange rate factors, but this did not completely offset the substantial revenue loss from physical retail.

From a geographical perspective, in the first quarter, Adidas only saw sales growth in the North American market and the Russian/CIS market. All other regions declined. Among them, sales in the North American market increased by 3.8% to 1.2 billion euros, the European market fell by 8% to 1.43 billion euros, and the sales in the Asia-Pacific market fell by 44.7% to 1.18 billion euros.

On March 11, Adidas announced for the first time the impact of the COVID-19 epidemic on the Chinese market in its 2019 financial report. From the Chinese New Year on January 25 to the end of February, Adidas’ revenue in Greater China plummeted by about 85% compared with the same period last year. However, with the reopening of stores in Greater China and South Korea in March, the decline in the Greater China market shrank to 58%. In the first quarter, the overall sales in Greater China decreased by 800 million to 1 billion euros, and operating profits decreased by 400 million to 5 billion. billion euros.

To make matters worse, Adidas predicts that the revenue and profit in the second quarter of 2020 will decline more than in the first quarter more obvious. Excluding currency factors, sales are expected to be more than 40% lower than the same period last year, and operating results will be negative.

70% of stores closed, resulting in a huge increase in inventory

Had no choice but to have crazy online promotions

As the epidemic continues to spread around the world, Adidas also announced today that out of consideration for the health and safety of employees, customers and partners, it will temporarily close stores in Europe and North America (including brand-operated stores and franchise stores) to curb the spread of the new coronavirus.

In mid-April, Adidas once again issued a statement stating that Europe, In North America, Latin America, emerging markets, Russia/CIS and most of Asia-Pacific, almost all self-operated and dealer stores have been temporarily closed, and wholesale and physical retail activities in the above markets have completely stopped.

This move not only affects the company’s revenue, but also causes a large increase in inventory.

Adidas’ financial report shows that as of the end of December 2019, Adidas’ inventory increased significantly compared with the same period last year. EUR 3.45 billion increased to EUR 4.09 billion at the end of 2019.

In this regard, Adidas explained that this is mainly because Adidas has prepared a large number of goods for China’s New Year Shopping Festival, but the new crown epidemic has The outbreak of pneumonia coincided with the Chinese New Year, and many stores suspended operations, resulting in a sharp drop in the number of customers, resulting in a backlog of goods.

At the same time, on April 19, the financial institution Credit Suisse also issued a report warning , in addition to short-term sales losses caused by closing stores in Europe and North America, Adidas is also facing a more serious inventory crisis.

The report shows that compared with normal product inventory levels, Adidas’ self-operated and its dealers currently have excess inventory. The magnitude reached approximately 1.6 billion euros, and assets and profit margins were significantly squeezed. It could take Adidas up to a year to clear out excess inventory.

In order to clear inventory as soon as possible, from the 3.8 Women’s Day shopping season to now, Adidas has launched many products in succession in the past two months. A large-scale discount promotion event, covering both online and offline.

From April 13th to April 30th, a large number of products are sold at a discount of about 50% on the official website of Adidas China . At the same time, a 30% discount event is also being held on the official website of Adidas abroad.

Some domestic offline stores of Adidas��There is even a “buy one, get one free” campaign, where two items are purchased for a single purchase, and the lower priced item is free. In the past, Adidas has rarely had such strong promotional activities. It can be seen that the accumulation of goods has indeed brought huge pressure to Adidas.

Received 3 billion euros in credit assistance

Directors and executives gave up dividend bonuses

Under the huge impact of the epidemic, Adidas had also previously requested credit assistance as a way to Ensure the company’s financial flexibility and enhance cash flow.

According to Bloomberg, on April 15, Adidas announced that it had received a sum of 3 billion euros (approximately US$3.28 billion) of credit assistance.

The loan is provided as a backup revolving loan with a term of 15 months until 2021 July. Among them, 2.4 billion euros come from German state-owned bank KfW, and the remaining 600 million euros come from commercial banks that have business dealings with Adidas, including HSBC, Citigroup, Deutsche Bank, Bank of America, etc.

Under the terms of the loan, Adidas must suspend dividend payments. At the same time, the company’s board of directors has suspended this year’s 1 billion euro stock buyback plan to save money, and decided to give up all short-term or long-term bonuses this year, which accounts for approximately 65% ​​of its target annual salary. Some bonuses for the next management team were also eliminated.

In addition, at the German headquarters, due to the reduction in working hours of some employees, the company has reached an agreement with the local works council to take vacations and agreements to reduce overtime.

The stock price fell nearly 40% in three months

The market value shrank by more than 12 billion US dollars

Misfortunes never come singly, and Adidas’ stock price also fell by nearly 40% in three months. %.

During the multiple circuit breakers in the U.S. stock market, Adidas’ stock price once fell by US$100, even in mid-day trading on March 18 Reached $87.65/share.

As of now, Adidas’ latest closing price is US$112.1 per share, compared with US$176.36 per share on January 5 this year. At the highest point of the stock, the market value has shrunk by one-third, leaving only US$22.327 billion.

Cancellation of major events

Another blow to revenue

Large-scale sports events have always been an excellent opportunity for major brands to demonstrate their market position and attract eye-catching marketing.

As usual in previous years, internationally renowned brands such as Nike and Adidas will sponsor heavyweight sports such as the World Cup, NBA, and Olympic Games. tournament.

It is understood that Adidas is not only one of the largest sponsors of this year’s European Cup, but also one of the largest sponsors of Germany, Spain and Belgium. Official sponsor. At the same time, Adidas also provides sponsorship for many associations and athletes of the Tokyo Olympics. However, due to the cancellation of the European Cup, the postponement of the Tokyo Olympics to July 2021, and the suspension or cancellation of other sports events, this is undoubtedly another heavy blow to Adidas.

Affecting domestic suppliers

Pousheng International’s performance and stock price both fell

Adidas’ “decadent” performance in the first quarter was also reflected in the supply chain.

Pou Sheng International (3813.HK), the main distributor and distributor of Nike and Adidas in China, has also encountered difficulties entering 2020. Worst performance in years.

On April 27, Pou Sheng International issued a performance warning. It will record a significant unaudited consolidated net loss of approximately RMB167 million in March, compared with an unaudited consolidated net profit of approximately RMB205 million in the same period in 2019.

The company stated that the loss was mainly due to the outbreak of the epidemic and the implementation of a number of strict control measures by the Chinese government, resulting in In the first quarter of 2020, most of the group’s retail stores and certain offices were temporarily closed.

Although more than 98% of the group’s directly-operated retail stores and franchised stores have resumed business, they still want to return to pre-epidemic times. It’s not easy.

The company’s stock price is the same, falling 42% since the end of the year, and its market value has shrunk by more than 6 billion yuan.

Although Adidas is currently in a severe situation, its CEO Casper Rost still has high expectations for Adidas and the sports industry. full of confidence in its development prospects.

Rost said: “Consumers’ desire for healthy living is increasing day by day, and they hope to build a better body shape and body through exercise. Stay healthy. By accelerating the growth of our retail and e-commerce businesses, we will be better positioned for long-term development. We are well positioned and our brand has strong roots as a global company.”< /p

This article is from the Internet, does not represent Composite Fabric,bonded Fabric,Lamination Fabric position, reproduced please specify the source.https://www.tradetextile.com/archives/35831

Author: clsrich

Back to top