adidas AG (XETR: ADS.DE) announced 2022 Q3 financial results on November 9, 2022. According to the announcement, net sales were up 11.4% (3 months, YoY). Meanwhile, adidas’ operating income and net income were down 16.0% and 64.2%, respectively.
Gross margin was reported as 49.1%, down 1.0pp year-over-year (3 months). In this regard, decline of gross margin likely reflects the higher supply chain costs in the recent inflationary environment.
Looking at sales by region, Latin America had the highest growth of up 50.6% (3 months, YoY). This was followed by Asia Pacific of up 14.6%. However, due to COVID-19 related restrictions, sales in Greater China were down 26.6%.
As you may be aware, adidas is one of the official sponsors of the FIFA World Cup. Thus, it seems that there is a positive impact on soccer-related sales even before the start of the FIFA’s tournament.
Given the adidas’ current challenging business environment, the company is planning to take steps in 2023 to ensure its business profitability. According to the announcement, the company will take countermeasures against increasing supply chain costs in the inflationary environment.
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