Shares in Adidas (ADS:XETRA) leapt 7.5% to €278.3 on Friday after the German sportswear giant sprinted in with forecast-beating first quarter sales and upgraded its 2021 outlook amid a rebound in online and China sales ahead of the return of mass sporting events.

In spite of lockdowns in Europe and industry-wide supply chain challenges, Adidas generated impressive 27% constant currency first quarter sales growth and now expects sales to grow at ‘a high-teens rate’ in 2021 given ‘healthy brand momentum’ and stronger-than-expected demand for its products.

First quarter operating profit came in at €704 million, up from €48 million a year earlier and ahead of analysts’ estimates of €575 million.

During the quarter, Adidas benefited from strong global footwear sales, ‘exceptional improvements’ in direct-to-consumer (DTC) revenues and even managed to deliver triple-digit sales growth in Greater China.

This was achieved despite a boycott by mainland Chinese consumers of international brands that have taken a stand against human rights abuses in the Xinjiang region.

FAST OUT OF THE GATE

‘We are fast out of the gate in the first year of our new strategic cycle, with excellent revenue growth, DTC-led sales increases in all market segments and strong profitability improvements,’ insisted CEO Kasper Rorsted.

‘We upgrade our full year outlook as we are now even more confident about a strong top-line recovery this year, even though the environment is not yet back to normal.

‘Our strategy “Own the Game” is off to a great start and 2021 will be an important first step in successfully executing against our 2025 ambition.’

SECOND QUARTER SET-UP EXCITES

Adidas forecast ‘significant’ sales growth acceleration to ‘around 50%’ in the second quarter, fueled by an array of product releases and major sport events including the UEFA Euro and the Copa America.

Shares highlighted Adidas’ attractions as a compelling reopening play here in March, arguing the company’s earnings would benefit as vaccinated consumers flock back to sports stadia.

‘The return of major sport events gives us the opportunity to showcase our brand in front of billions of consumers and we look forward to welcoming them back at our stores in all parts of the world,’ enthused Rorsted.

‘As a result, our revenues will grow even faster than expected this year, driven by strong sales increases in all markets.’

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Issue Date: 07 May 2021