By Scott Kanowsky
Investing.com -- Shares in Adidas AG (ETR:ADSGN) dropped sharply toward the bottom of the pan-European STOXX 600 on Wednesday after the athletic apparel maker cut its annual financial outlook, citing a weaker than expected recovery in China stemming from strict COVID-19 restrictions.
The Herzogenaurach, Germany-based company said in a statement that it now expects total currency-neutral revenues to grow by mid-to-high single digits this year, down from its prior estimate of between 11-13%.
Net income from continuing operations is also seen at around €1.3B, below the previous guidance at the lower end of the €1.8B – €1.9B range.
Adidas had initially expected third quarter revenues in China to remain flat compared to the same period last year. But COVID lockdowns in the country have forced it to reconsider its revenue estimates for Greater China, with sales in the region now estimated to decline by double digits over the rest of 2022.
The group added that the adjusted guidance also "accounts for a potential slowdown of consumer spending in [other] markets during the second half of the year as a result of the more challenging macroeconomic conditions."
However, Adidas said it still expects total revenue to grow by double digits in the second half, thanks in part to easier prior-year comparable numbers, a strong product pipeline, and the restocking of wholesale customers as supply chain constraints ease.