Adidas expects lower profits from supply chain disruptions

The German manufacturer of sportswear Adidas It had a strong third quarter, but cut its annual gross profit margin projection on Wednesday, following costs linked to supply chain disruptions.

Gross margin for 2021 should be between 50.5 and 51%, instead of the 52% previously estimated, according to a statement.

During the third quarter, net profits, not counting the positive impact of the sale of the subsidiary Reebok, fell 10% to settle at 479 million euros (about 554 million dollars), although the annual objective was maintained.

In August, the manufacturer announced that it ceded its Reebok subsidiary, which was accumulating problems, to the US group Authentic Brands Group (ABG) for $ 2.1 billion.

As a result of the revaluation of the rights linked to the brand, Adidas posted an exceptional net profit of 402 million euros (about $ 464 million) at the end of September, bringing the group’s share result in the third quarter to 960 million euros (about $ 1.11 billion).

Complications in the Chinese market, effects of confinements linked to Covid-19 in the Asia-Pacific region that forced factories to close in Vietnam for several weeks, and global disruptions in the supply chain slashed sales in the quarter by about 600 million euros (about $ 695 million), the group estimates.

The turnover between July and September of the brand of the three strips finally reached 5,700 million euros (about 6,660 million dollars), an increase of 3% year-on-year.

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