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Adidas weathers pandemic as online sales grow by 53%

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Saleha Riaz
·3 min read
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Adidas share price rose by 1% on Wednesday as it announced resumption of dividend. Photo: Getty Images
Adidas share price rose by 1% on Wednesday as it announced resumption of dividend. Photo: Getty Images

Adidas (ADS.DE) operating profit took a slight hit in 2020 due to the pandemic and store closures, but sales ticked up, with online shopping getting a 53% boost. The company has decided to resume dividend payments.

Its share price was up roughly 1% on Wednesday morning.

Fourth-quarter sales rose a currency-neutral 1% to €5.6bn euros (£4.8bn, $6.6bn), while operating profit slipped to €225m from €245m in 2019.

The company said its global store opening rate currently standing at above 95%, and it expects a "strong top-line recovery in 2021." Sales are expected to increase at a mid- to high-teens rate on a currency-neutral basis.

“Our business continued to recover towards year-end and we returned to growth in the fourth quarter. E-com was a standout throughout the year as we grew revenues in our most important store by 53% in 2020 to significantly more than €4bn,” said CEO Kasper Rorsted.

“We are confident about 2021 and will be fast out of the gate in the first year of our new strategic cycle, delivering mid- to high-teens sales growth globally,” he added.

Adidas stock price day chart. Source: Yahoo Finance
Adidas stock price day chart. Source: Yahoo Finance

The German sportswear maker sales returned to growth in Q4. Entering the fourth quarter, the company recorded double-digit growth rates across its biggest markets: Greater China, North America and Europe in October.

In Greater China, this momentum was sustained throughout the quarter as reflected by strong double-digit growth in the company’s direct-to-consumer business.

READ MORE: Adidas mulls potential sale of Reebok brand

Overall, Asia-Pacific grew 1%, driven by a strong recovery in Greater China, where sales were up 7%. With an increase of 2%, sales in North America were also up compared to the prior year.

Since January 1, 2021, Adidas said it has started managing Greater China as a separate market, reflecting "the importance of Greater China as a growth market for the company."

Watch: Adidas targets online sales and greener products

While stores in North America remained largely open, traffic continued to be “materially below” the prior year level.

In Europe, about half of the company’s stores were closed until year-end, negatively impacting the sales development in the region.

The company said it has decided to resume dividend payments and will propose paying €3 per dividend-entitled share for the financial year 2020 to shareholders at the annual general meeting on 12 May.

"The dividend proposal, which reflects the company’s strengthened financial profile as well as management’s positive outlook for the year 2021, would result in a total dividend payout of € 585m," it said.

The company decided in February 2021 to begin a formal process aimed at divesting Reebok. Adidas is going to report the Reebok business as discontinued operations from Q1 2021.

Watch: Adidas considers Reebok sale