Adidas Expects Sales To Dip By $1.2B

Adidas expects sales to dip by $1.2 billion as it continues to reel from factory closures in COVID-battered Vietnam and supply chain issues that are expected to last into next year, the sportswear giant announced Wednesday.

The company fell short of producing nearly 100 million items in the second half of 2021 due to the closure of manufacturing units between July and September, the company’s CFO, Harm Ohlmeyer said. Ohlmeyer also adds that shipping delays at both origin and destination ports further exacerbated the problem, resulting in a third of shipments leaving Asia with significant delays.

All these issues have prompted the company to lower its sales forecast for the fourth quarter of 2021 and the first quarter of 2022. The German company, however, expects its sourcing network to get back to normal by the end of 2021, Reuters reported.

Adidas ‘ shares are down 5 percent following the announcement.

To address its supply chain woes, the company is taking a range of steps. This includes moving some of its production capacity outside Vietnam, where the company manufactures nearly 28 percent of its products, as well as use of air freight to avoid delivery issues during the holiday season. For example, Adidas is now partnering up with manufacturing hubs in China and Indonesia to produce 30 million units.

Adidas also announced that it plans to offer discounts on fewer products and increase the cost of its products by nearly 4 percent heading into next year as it looks to offset rising costs.

In Q3, the company’s sales rose by 3 percent reaching $6.65 billion, while its operating profit declined by 8.5 percent to $776.7 million.

Adidas, Nike And Under Armour Are Struggling With Production Snafus In Vietnam Adidas CEO: Consumers Will Force Fashion Industry To Become More Sustainable

Originally published at https://retailbum.com on November 10, 2021.