As of June 4, Adidas has reopened two-thirds of its global store footprint, the first critical step toward reversing the first quarter’s near-total drop in net income brought on by across-the-board coronavirus-induced closures.
With several weeks of sales now under its belt, Adidas’ Greater China business—the “first major market on the road to recovery”—has resumed positive revenue growth, with all company-owned and partner-operated stores ringing up shoppers since two weeks into April. Though May’s footfall is off compared to the year ago, “targeted efforts to revitalize retail have led to sequential improvements since stores reopened,” said Adidas, which now expects the region’s second-quarter sales to closely mirror the prior-year period when revenue climbed 14 percent.
Consumers who show up at stores seem intent on spending as uptrending conversion rates are helping to mitigate any traffic shortfalls, bolstered by “exceptional” growth in digital retail.
While most of Adidas’ owned stored across Asia-Pacific and emerging markets have restarted operations, Europe and North America have some catching up to do.
Three-quarters of the company’s European stores have been reopened as of Thursday, though most keep a limited schedule in order to clean and sanitize facilities in keeping with local regulations. In Russia and the surrounding regions, about half of the company’s store are welcoming shoppers. Not quite half of its brick-and-mortar base across North America and Latin America is back in business
Adidas said this early read on a return to normal falls in line with the 40 percent second-quarter sales dip it projected back in April.
The year unraveled quickly for Adidas—as it did for most players in the consumer discretionary space. First-quarter revenue tumbled 19 percent, though sales were up 8 percent, as the coronavirus outbreak leapt from its origins in production powerhouse China and ricocheted around the world.