German sportswear firm Adidas says it expected a rebound in profits in the third quarter after it plunged to a big loss in the second quarter when the majority of its stores were closed due to coronavirus lockdowns.
Adidas reported a second-quarter operating loss of US$396 million, worse than the $344 million expected by analysts on sales down 35 per cent to $4.25 billion.
The company said its sales were flat for the second quarter in China, however it saw double-digit growth in May and June.
But CEO Kasper Rorsted said the company expects to benefit from more people exercising and dressing down with around three-quarters of companies planning to allow staff to continue to work from home.
“The work environment will have changed forever,” he said, noting that sales of plastic slip-on Adilette bath sandals had tripled during the crisis.
The loss included coronavirus-related charges of around $297 million, mainly due to an increase in inventory and bad-debt allowances, as well as the impairment of retail stores and the trademark of its struggling Reebok brand.
Adidas expects a material improvement in third-quarter sales assuming there are no new major lockdowns, but still down on last year by a mid to high-single-digit rate.
It sees an operating profit of between $712 million and $831 million in the period.
The company declined to give an outlook for the full year.
“We are now seeing the light at the end of the tunnel as the normalisation in the physical business continues,” said Rorsted in a statement.
E-commerce sales jumped 93 per cent in the quarter and remained at a very high level even as stores started to reopen, with 92 per cent already back in business, albeit with reduced opening hours.
Rivals Nike and Puma also reported quarterly losses, while Nike saw a 75-per-cent rise in online sales.
Reporting by Emma Thomasson, Editing by Thomas Escritt and Edmund Blair.