Global Slump with First Deficit in 31 Years Last Year
Brief Performance Improvement in China...Reason Behind the Passionate Offensive
Sports brand Adidas, which recorded a loss for the first time in over 30 years, saw an 8% sales growth in the Greater China region last year. In particular, its performance improved further in the fourth quarter, immediately after the CEO visited China and launched a charm offensive.
On the 14th, China's Pengpai News reported that Adidas' sales in the Greater China region, one of its "top three strategic markets worldwide," reached 3.19 billion euros (approximately 4.5992 trillion KRW) last year, marking an 8.2% increase compared to the previous year. In the fourth quarter alone, sales surged 36.8% year-on-year to 670 million euros.
In September last year, Bjørn Gulden, CEO of Adidas, visited China and toured the site. (Photo by China First Financial Daily)
Bjorn Gulden, Adidas CEO who joined from competitor Puma in 2022, attracted attention when he visited China last September and declared, "Both I and the company are big fans of China." At the time, he further stirred interest by wearing sportswear emblazoned with the word "China" in large letters as a gesture of friendliness.
Previously, Adidas, along with Nike and H&M, had declared it would not use cotton from the Xinjiang region, which has been criticized for human rights abuses against the Uyghur population. This led to a boycott movement among Chinese consumers, causing Adidas' sales to decline by 1.9% in 2022. However, thanks to CEO Gulden's charm offensive last year, the company achieved a rapid performance recovery.
Following the earnings announcement the day before, CEO Gulden emphasized in a conference call regarding the Chinese market, "2023 will be a turning point for Adidas to grow again in China," adding, "China will continue to play the most important strategic role in Adidas' global development, and we will remain optimistic and conduct in-depth research on the Chinese market." He also praised China's supply chain, stating, "It has the world's best advantages in terms of speed and innovation," and stressed, "It is the foundation that allows us to respond more quickly to consumer demands and plays a crucial role in supporting Adidas' global development."
According to Adidas' global performance announced the previous day, the company recorded a loss of 58 million euros last year, marking its first deficit since 1992. In particular, it struggled with inventory management of products collaborated with American hip-hop star Ye (Kanye West) following their split in October 2022. Last year, Adidas sold 750 million euros worth of related products and donated 140 million euros, a portion of the sales revenue, to charity organizations.
Above all, a decline in sales in the key North American market dealt a blow to overall performance. Last year, total North American sales amounted to 5.219 billion euros, down 16.1% from the previous year. Sales in the largest market, Europe, Middle East, and Africa, totaled 8.235 billion euros, a 0.4% decrease.
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