Adidas Q2 sales are falling in China as consumers boycott international brands

LONDON – Adidas has increased its focus for the year, despite a drop in sales in China where some consumers have boycotted the sportwear brand for its stance against alleged human rights abuses.

In its second-quarter earnings report Thursday, Adidas said revenues had picked up everywhere except Greater China, particularly in Europe and the United States, leading to a 55% growth in second-quarter sales. quarter from the previous year.

“We see that North America, Latin America and Europe have a very, very strong growth and we see uncertainties in China, but I am very, very convinced that China will have a lot, a lot of success this year as well.” , Kasper Rorsted, CEO of Adidas, told CNBC’s Squawk Box Europe.

The German sports giant’s net income reached 397 million euros ($ 470 million) for the second quarter, in stark contrast to the net loss of 295 million euros reported this time last year, at height of the coronavirus pandemic.

Online revenues fell 14% over the second quarter, as more consumers were able to visit stores. Adidas saw a sharp rise in online sales for the same period in 2020 when several markets were closed.

Rorsted said online sales are undergoing some “normalization” from the abnormal levels seen last year, but he still expects “strong growth” in e-commerce going forward.

Adidas has raised its prospects, saying it now expects sales growth of up to 20% annually in 2021, supported by upcoming product releases and the fact that more people will be able to attend live sporting events.

Boycott of China

The company’s sales in China are closely monitored by analysts and investors.

Adidas said Thursday that second-quarter sales fell more than 16% in Greater China.

Pedestrians walk by a large Adidas logo in the multinational German sportswear store.

Miguel Candela | SOPA Images | LightRocket via Getty Images

“Because of the geopolitical tensions, we saw a particular impact on our online business in the second quarter in China, and we think that over time it will normalize,” Rorsted said.

Come on some mainland Chinese consumers have begun to boycott international brands that have taken a stand against the treatment of one of China’s ethnic minorities in the Xinjiang region, where several cotton plantations are located.

Ethnic Uyghurs, who live mostly in western China, have been identified by the United Nations, the United States, the United Kingdom and others as a repressed group.

Earlier this year, Canada, the United Kingdom and the United States issued a common statement expressing “deep and permanent concern” over forced labor, mass detention in internment camps and other serious abuses committed against Uyghurs in Xinjiang. The European Union in March imposed sanctions on Chinese officials who say they are responsible for the abuses against Uighurs.

China’s foreign minister has characterized such claims as “malicious lies” designed to “wipe out China” and “frustrate China’s development”.

Adidas has already stated that it has a “zero tolerance approach to slavery and human trafficking.”

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