On August 6, 2020, German sportswear giant Adidas announced a significant second-quarter net loss of €295 million ($349 million), a sharp decline from the €531 million profit recorded in the same period of 2019.
The company’s revenue dropped 35% to €3.6 billion from €5.5 billion, driven by widespread store closures during the COVID-19 pandemic.
Online Sales Surge Amid Challenges
Despite the downturn, Adidas nearly doubled its e-commerce sales, with direct-to-consumer revenue showing slight growth.
At the height of the pandemic, 70% of Adidas stores worldwide shut down. By August 2020, 92% of its stores had reopened, signaling a gradual return to normalcy.
Optimism for Recovery
Adidas CEO Kasper Rorsted expressed confidence, stating, “We’re starting to see light at the end of the tunnel as our physical stores reopen.”
The company projected a third-quarter operating profit of €600 million to €700 million, a significant improvement from Q2, assuming no major new lockdowns.
Rorsted highlighted strong consumer demand in both physical and digital channels as a foundation for future growth.
Regional Performance Varies
Sales for the Adidas brand fell 33%, while Reebok, heavily reliant on the U.S. market, saw a steeper 42% revenue drop due to ongoing pandemic restrictions.
In China, sales remained stable, with strong growth in May and June as stores reopened.
Uncertain Full-Year Outlook
Adidas refrained from providing a full-year forecast, citing uncertainties around the pandemic’s trajectory, the pace of store recovery, and global economic conditions.
However, the company emphasized the long-term potential of the sportswear industry, bolstered by rising demand for its products.
Broader Context and Challenges
The financial hit came during a turbulent period for Adidas, which faced a diversity scandal earlier in 2020, leading to the resignation of HR chief Karen Parkin in June.
The company also paused its advertising on Facebook in response to concerns over the platform’s handling of hate speech, joining other major brands in the boycott.
Looking Ahead
The Q2 loss underscores the pandemic’s toll on the sportswear industry, but Adidas’ strong e-commerce growth and store reopenings offer hope for recovery.
The company’s focus on digital sales and optimism for Q3 signal resilience as it navigates ongoing global challenges.
