"In the first quarter, consumer demand for our brand and products was strong in all Western markets. Our combined sales in North America, EMEA and Latin America grew at a double-digit rate. Backed by an exceptionally strong wholesale order book and relentless focus on driving growth in our own DTC channels, we expect this positive development to continue for the rest of the year. In the East, we will return to growth in Asia-Pacific in the second quarter, while we expect the challenging market environment in Greater China to continue. With strong double-digit growth in the vast majority of our markets, representing more than 80% of our business, we are well-positioned for success in 2022", stated adidas CEO Kasper Rorsted.

First Quarter Results

In the first quarter of 2022, adidas’ currency-neutral sales declined by 3% to 5.30 billion euros, as compared to the same period last year, thanks to challenges in both supply and demand.

The company noted that despite strong demand in all Western markets, supply chain constraints resulting from last year’s lockdowns in Vietnam reduced top-line growth by around 400 million euros this quarter. Moreover, the challenging market environment, as well as COVID-19-related lockdowns in Greater China and Asia-Pacific, continued to weigh on the top-line development in these regions.

From a regional perspective, currency-neutral revenue in all Western markets combined increased by 13% in the three months to 31^st March over the same quarter of 2021. Specifically, in the North America region, adidas’ revenue grew by 13%, totalling 1.40 billion euros; the Latin America region recorded a revenue increase of 38%, reaching 419 million euros. Sales in the EMEA region were “most impacted by the supply shortages”, but still rose by 9%, adding up to 1.94 billion euros. However, in Greater China, revenue decreased by 35%, amounting to 1.00 billion euros, due to a challenging market environment amplified by COVID-19 related lockdowns. In the Asia-Pacific, revenue too declined by 16%, amounting to 506 million euros.

In the first quarter of the current fiscal year, the gross margin shrunk to 49.9%, as compared to a gross margin of 51.8% in the same period last year, mainly due to the significant increase in sourcing and freight costs.  

The company’s net income from continuing operations diminished to 310 million euros in the first quarter of 2022 (2021: 502 million euros), while basic earnings per share from continuing operations reached 1.60 euros (2021: 2.60 euros).

Fiscal 2022 Outlook

The company informed that it continues to expect a currency-neutral revenue increase between 11% and 13% for fiscal 2022, but that "growth is now anticipated to come in at the lower end of this range due to the severe impact from covid19-related lockdowns in China". Consequently, net income from continuing operations should also reach the lower end of the previously communicated range of between 1.8 billion euros and 1.9 billion euros.

Nevertheless, adidas is expecting to return to growth in the second quarter, despite a continued sales decline in Greater China and around 200 euros million negative impact from supply chain constraints.