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Adidas said the persisting lockdowns in China and Vietnam affected its performance in Q2 2022.
German design company Adidas recorded a 28% decline in operating profit in Q2 2022 despite a 4% increase in currency-neutral sales. The company said operating profit dropped to 392 million euros, also $398.43 million. Like many other companies that saw losses in their quarterly earnings, Adidas pointed to higher supply chain costs in Q2 2022.
In addition, the German company said it suffered from suspending business in Russia. Adidas joined the group of companies that cut ties with Russia after it invaded Ukraine. In March, the design company closed all its stores across the country and suspended its online shop. Before the company announced its decision, Nike and Puma had also shut down their stores in Russia as many western businesses pulled out of the country. At the time, the German sportswear company stated that it condemns any form of violence and stands in “solidarity with those calling for peace.”
After the closure of stores in Russia, Adidas also donated 1 million euros to refugees and charities. The company also gave clothes to the Global Aids Network for People in need in Ukraine and affected neighboring countries. More so, the sportswear design company promised to continue to pay its employees in Russia despite its stores’ closure.
Adidas Misses Revenue Expectations in Q2 2022
Furthermore, Adidas said the persisting lockdowns in China and Vietnam affected its performance in Q2 2022. Although many nations have resumed daily activities, many are still under lockdown in China due to more coronavirus cases. At least one million people were ordered to stay home in Wuhan after more people tested positive for the virus.
With the different factors affecting Adidas, the company fell short of expectations in Q2 2022. Quarterly revenue came in at 5.6 billion euros, with 1.8 euros earnings per share. Meanwhile, analysts were expecting earnings per share of 1.84 euros and revenue of 5.61 billion euros.
At press time, Adidas shares are up 2.06% to trade at $174.52 per share. The company has also trimmed its 2022 outlook for July based on a slower-than-expected recovery in China.
Adidas Originals made its first debut in the NFT space with a collaborative project in December 2021. The project was in partnership with Bored Ape Yacht Club, PUNKS Comic, and gmoney. The design company took the second position on the OpenSea rankings after earning $43 million from selling 30,000 copies of a digital asset.