LONDON — Adidas has increased its outlook for the year, despite a drop in sales in China where some consumers have boycotted the sportwear brand for its stance against alleged human rights abuses.
In its second-quarter earnings report Thursday, Adidas said revenue had picked up everywhere except Greater China, particularly in Europe and the U.S, driving a 55% hike in second-quarter sales from the previous year.
“We are seeing North America, Latin America and Europe having a very, very strong growth and we are seeing uncertainty in China, but I am very, very convinced that China will be very, very successful also for this year,” Kasper Rorsted, CEO of Adidas, told CNBC’s Squawk Box Europe.
The German sportswear giant’s net income came in at 397 million euros ($470 million) for the second quarter, in sharp contrast to the net loss of 295 million euros reported this time last year, at the heights of the coronavirus pandemic.
Online revenues fell 14% over the second quarter, as more consumers were able to visit stores. Adidas saw a sharp hike in online sales over the same period in 2020 when many markets were in lockdown.
Rorsted said online sales were undergoing some “normalization” from the abnormal levels seen last year, but he still expects “strong growth” in e-commerce going forward.
Adidas increased its outlook, saying it now expects sales growth of up to 20% year-on-year in 2021, supported by upcoming product releases and the fact that more people will be able to attend live sports events.
China boycott
The company’s China sales are being closely monitored by analysts and investors.
Adidas said Thursday that second-quarter sales fell by more than 16% in Greater China.
“Because of geopolitical tensions, we did see an impact particularly in our online business in the second quarter in China, and we think that will over time normalize,” Rorsted said.
It comes after some mainland Chinese consumers began boycotting international brands that have taken a stand against the treatment of one of China’s ethnic minorities in the Xinjiang region, where many cotton plantations are found.
The ethnic Uyghurs, who live mostly in China’s west, have been identified by the United Nations, United States, United Kingdom and others as a repressed group.
Earlier this year, Canada, the U.K, and the U.S. issued a joint statement expressing “deep and ongoing concern” about forced labor, mass detention in internment camps and other serious abuses committed against the Uyghurs in Xinjiang. The European Union in March imposed sanctions on Chinese officials it says are responsible for abuses against Uyghurs.
China’s foreign ministry has characterized such claims as “malicious lies” designed to “smear China” and “frustrate China’s development.”
Adidas has previously said that it has a “zero tolerance approach to slavery and human trafficking.”