Adidas on Friday blamed poor sales in China for a sharp drop in first quarter profit
The German sportswear giant reported net profit of €310 million in the first three months of 2022, down 38% on the same period last year.The company said the decline was caused by a"challenging market environment" in China, where sales fell 35%, as well as supply chain disruptions. With no end in sight to Chinese President Xi Jinping's zero-Covid strategy, the outlook for Adidas' business in China — which accounted for about 20% of the company's sales last year — is grim.
Chinese authorities imposed a draconian lockdown in Shanghai — China's financial hub — in late March following a surge in coronavirus cases. Although authorities started to lift some restrictions last month, more than 8 million residents are still banned from leaving their residential compounds.Restrictions in the capital Beijing have also been tightened in recent days, and are likely to inflict more pain on Western brands at a time when China's economy is already contracting.
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