Adidas cut its profitability targets for this year and forecast a plunge in sales of sporting goods in China as the Covid-zero policy keeps stores shut.
The company also said Friday supply bottlenecks in Vietnam have reduced the availability of products, eroding sales. The shares fell as much as 4.4 per cent.
A fifth of the shoemaker’s business is underperforming amid whirlwind of geopolitical challenges. First-quarter revenue to Greater China fell 35 per cent, and the company has been starting to increase prices as higher costs for transport, shoes and garments erodes profitability.
Foreign brands are struggling to hang onto China as a growth driver after almost a year of consumer boycotts and preferential treatment for home-grown companies. The country’s Covid-zero policy is only worsening matters for retailers there. Adidas replaced the head of its Chinese operations last month, promoting an executive who has been managing a local brand.