German sportswear giant, Adidas AG, is expecting a significant sales rebound in 2021, with its sights set on the lucrative markets in China, the rest of Asia, and Latin America. Despite the challenges posed by the COVID-19 pandemic, the company remains optimistic about its prospects for growth. However, Adidas anticipates that its operating profit will be affected by the costs associated with divesting its subsidiary brand, Reebok.

In the fourth quarter of 2020, Adidas achieved a 1% increase in sales, reaching 5.548 billion euros, when measured in a currency-neutral manner. Although there was a slight decline in operating profit, which fell to 225 million euros, it still exceeded the average expectations of analysts. The analysts had predicted sales of 5.47 billion euros and an operating profit of 202 million euros.

One of the main reasons for Adidas’ positive outlook is its impressive performance in key markets like China. Despite the adverse conditions caused by the pandemic, the company has managed to sustain its momentum and continue on its growth trajectory in the region. This success is also supported by Adidas’ ongoing efforts to gain market share in emerging economies such as India and Brazil.

Additionally, the sportswear giant believes that there are substantial growth opportunities in the rest of Asia and Latin America. These markets have displayed resilience and a strong demand for sportswear, as consumers increasingly embrace active and healthier lifestyles. To take advantage of this trend, Adidas intends to introduce innovative products and tailored marketing strategies that cater to the preferences and needs of these regions.

Nevertheless, Adidas acknowledges that the divestment of Reebok will have an impact on its operating profit. Despite its historical significance, Reebok has struggled to keep up with the fast-paced and competitive sportswear market in recent years. In order to streamline its portfolio and optimize its resources, Adidas has taken the decision to separate from Reebok. Although this transition will incur costs, the company believes it is necessary to refocus its attention on its core brand and regain its position as a market leader.

Looking forward, Adidas remains committed to its long-term strategic priorities. These include enhancing its digital presence, expanding its direct-to-consumer business, and improving its supply chain capabilities. The company aims to provide customers with a seamless and personalized shopping experience, while also maximizing operational efficiencies.

In conclusion, Adidas is poised for a strong recovery in 2021, driven by robust sales growth in China, the rest of Asia, and Latin America. Although the divestment of Reebok may impact its operating profit in the short term, Adidas views this move as a necessary step towards long-term success. By capitalizing on emerging market opportunities, leveraging digital platforms, and enhancing its supply chain, Adidas intends to solidify its position as a leading global sportswear brand.

Useful links:
1. Adidas Group Profile
2. Adidas Supply Chain Sustainability