Adidas reduced its revenue projections this year for the second time amid continued production delays in China caused by COVID-19-related restrictions, CNBC reported.
“Adidas noted that while it has not experienced a meaningful slowdown in sales nor significant cancellations of wholesale orders in any other market, its adjusted outlook is accounting for a potential slowdown of consumer spending globally,” a recent CNBC report states.
Taking recently recorded slow recovery rates in the country into account, the sneaker and athletic brands predict potential slowdowns in other markets.
The company’s announcements come as other popular brands issue profit warnings, including Kohl’s, Gap, Bath & Body Works and Bed Bath & Beyond. One of the most alarming reports was released by Walmart, who also cut its quarterly and full-year profit figures.
According to the retail store, the delays have led to inflation, which is the main cause of the increase in spending for necessities such as food and less on items like clothing and electronics.
“More and more retailers are sounding the alarm with inflation growing at the fastest pace in four decades. With consumers confronting higher prices at the gas pump, grocery store and restaurants, some are being pickier about where they’re spending money and where they’re pulling back,” the report continues.
Adidas expects its revenue to continue declining at a double-digit rate in China as a result of the limitations imposed by the local government. The company also expects a large sum of excess inventory components through the end of this year, also projected to impact the company’s profits.
The Germany-based retailer saw its revenues for the company to grow at a mid-to-high single-digit rate in 2022, compared with previous growth projections, which stood between 11% to 13%. Its gross margin is now expected to reach 49% in 2022, reflecting a 50.7% decrease, and a net income of 1.3 billion euros, reflecting a drop from last year’s 1.8 billion euros to 1.9 billion euros.