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Adidas reported large losses in the first quarter of the year. The giant reported a 93% drop in profits and 19% less sales during the period.
Meanwhile, the company warned of an even bigger hit to revenue in the second quarter after a crash due to the new coronavirus forced the German sportswear maker and other retailers to close their stores.
Adidas seeks more than 1 billion euros in state aid from Germany
The company will continue to pay the rent.
Adidas ‘operating profit for the first quarter fell to € 65m, which is several times less than analysts’ expected at € 263m.
Adidas says it has suffered a blow of approximately € 250 million from unsold shares in China, canceling orders and debts, Reuters reports.
The company’s sales fell 19% to 4.75 billion euros compared to analyst forecasts of 4.85 billion euros, according to data from Refinitiv Eikon. For the second quarter, there is a 40% drop in sales.
Adidas shares fell 1.2% after the announcement. The giant’s shares have been reduced by about 30% since the start of the pandemic.
The clothing manufacturer declares that it cannot provide a forecast for the year, given the uncertainty and uncertainty about when closed stores can resume operations.
Adidas said that more than 70% of its stores are currently closed globally. Meanwhile, e-commerce has grown 35% in the first quarter, but this only partially offsets the decline.
Adidas shares fell after disappointing results
The German company assured that it will grow again in the second half.
In the first three weeks of April, the company said sales in China continued to rebound as stores there gradually opened.
On March 31, Adidas announced that it had a cash reserve of € 1,975 million. On April 14, the company received a loan approval of € 2.4 billion to help overcome the crisis.
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