Image: Adidas AG
In 2021, Adidas was able to increase its currency-neutral revenues by 16 percent. In euro terms, the company’s revenues increased 15 percent to 21.234 billion euros.
In total, the company said, the challenging market environment in Greater China, extensive covid-19-related lockdowns in Asia-Pacific as well as industry-wide supply chain disruptions reduced revenue growth by more than 1.5 billion euros during the year.
Commenting on the financial results, Kasper Rorsted, CEO of Adidas said in a release: “In 2021, we delivered a strong set of results despite several external factors weighing on both demand and supply throughout the year “Wherever markets operated without major disruptions we have been experiencing strong top-line momentum. In 2022, we will build on this momentum and continue to grow both our top- and bottom-line at double-digit rates amid heightened uncertainty.”
Review of Adidas’ 2021 performance
The company’s wholesale revenues as well as sales in Adidas’ own-retail stores grew at strong double-digit rates in 2021. E-commerce revenues increased 4 percent during the year, on top of the exceptionally high growth in 2020 when e-commerce revenues had grown by more than 50 percent.
The company added that currency-neutral sales in EMEA, North America, and Latin America increased by 24 percent, 17 percent and 47 percent, respectively. At the same time, the challenging market environment in Greater China, up 3 percent and the extensive covid-19-related restrictions in Asia-Pacific, up 8 percent, weighed on Adidas’ results in these markets.
The company’s gross margin increased 0.7 percentage points to 50.7 percent. As a result of the strong top-line increase in combination with the improved gross margin and lower operating expenses as a percentage of sales, the company’s operating profit increased 166 percent to 1.986 billion euros and the operating margin increased 5.3 percentage points to 9.4 percent.
Net income from continuing operations increased 223 percent to 1.492 billion euros in 2021 and both basic and diluted EPS from continuing operations also increased 223 percent to 7.47 euros.
The company further said that the Adidas executive and supervisory boards will recommend paying a dividend of 3.30 euros per dividend-entitled share, representing an increase of 10 percent compared to the prior year dividend.
Adidas posts decline in Q4 revenues
The company said, currency-neutral revenues in the fourth quarter declined 3 percent. In euro terms, Adidas revenues were flat versus the prior year at 5.137 billion euros.
Significant supply shortages as a result of the lockdowns in Vietnam last year, the challenging market environment in Greater China as well as covid-19-related lockdowns in Asia-Pacific reduced revenue growth by more than 400 million euros in Q4.
DTC revenues were stable versus the prior year, reflecting a 14 percent increase compared to the 2019 level. While Adidas e-commerce revenues experienced a strong increase in full-price sales, revenues in the company’s own digital channel declined by 2 percent. Compared to the 2019 level, e-commerce revenues grew 39 percent in the fourth quarter.
The company’s currency-neutral revenues in North America declined 4 percent during the quarter. While EMEA was also significantly impacted by the supply shortages, revenues grew 15 percent, driven by double-digit growth in both DTC and wholesale. Fourth quarter revenues in Latin America improved 9 percent, reflecting strong double-digit growth versus the 2019 level. Revenues in Greater China, down 24 percent and APAC, down 6 percent, declined due to the supply shortages, covid-19-related restrictions and – in the case of China – the challenging market environment.
In the fourth quarter, the gross margin declined by 0.1 percentage points to 49 percent. Operating profit amounted to 66 million euros, resulting in an operating margin of 1.3 percent. Net income reached 123 million euros in the quarter compared to 143 million euros last year. Both basic and diluted EPS from continuing operations were 0.58 euros compared to 0.70 euros in Q4 2020.
Adidas expects currency-neutral sales to increase between 11 percent to 13 percent
After the recovery from the coronavirus pandemic in 2021, Adidas expects double-digit top-line growth to continue in 2022 amid heightened uncertainty. Driven by the execution of the company’s strategy ‘Own the Game’ as well as its strong product pipeline currency-neutral revenues are projected to increase at a rate between 11 percent and 13 percent.
From a regional perspective, currency-neutral revenues are expected to increase in all markets. While currency-neutral sales in North America and Latin America are projected to grow at a mid- to high-teens rate, currency-neutral revenues are expected to grow at a rate in the mid-teens in EMEA and Asia-Pacific. Greater China is expected to record a sales increase in the mid-single digits.
Adidas’ gross margin is expected to continue to increase and reach a level of between 51.5 percent and 52 percent. The company’s operating margin is expected to increase to a level of between 10.5 percent and 11 percent. Driven by the strong top-line growth in combination with the margin improvements, net income from continuing operations is projected to increase to a level of between 1.8 billion euros and 1.9 billion euros in 2022.
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