LONDON — Adidas is extra assured about gross sales this yr because it notes stronger-than-expected demand for its merchandise the world over, regardless of a boycott by shoppers in mainland China.
The German sportswear retailer expects currency-neutral gross sales to rise at a “high-teens” fee this yr, with a “important” acceleration already seen within the second quarter, the corporate mentioned on Friday.
“This acceleration shall be fueled by an array of revolutionary product releases,” Adidas mentioned in an announcement. It expects main sport occasions, akin to UEFA Euro and the Copa America, to additionally help the enterprise.
The corporate reported internet revenue of 502 million euros ($605 million) for the primary quarter of this yr, up from 26 million euros in 2020. Foreign money-neutral gross sales on the firm rose 27% over the interval.
The corporate mentioned gross sales in China grew by 156% over the primary three months of the yr.
This comes regardless of a boycott by some mainland Chinese language shoppers of worldwide manufacturers which have taken a stand in opposition to the remedy of one among China’s ethnic minorities within the Xinjiang area, the place many cotton plantations are discovered.
The ethnic Uyghurs, who reside principally in China’s west, have been recognized by the United Nations, United States, United Kingdom and others as a repressed group.
In March, Canada, the U.K, and the U.S. issued a joint statement expressing “deep and ongoing concern” about forced labor, mass detention in internment camps and other abuses committed against the Uyghurs in Xinjiang. The European Union in March imposed sanctions on Chinese officials it says are responsible for abuses against Uyghurs.
China’s foreign ministry in March characterized such claims as “malicious lies” designed to “smear China” and “frustrate China’s development.”
Adidas has previously said that it has a “zero tolerance approach to slavery and human trafficking.”
In a statement from October 2019, it said that when “learning of allegations against several companies sourcing from Xinjiang, China, where ethnic minorities were reportedly subject to forced labor in spinning mills we explicitly required our fabric suppliers not to source any yarn from the Xinjiang region.”
It added: “Adidas has never manufactured goods in Xinjiang and has no contractual relationship with any Xinjiang supplier.”
Meanwhile, this year, the German retailer also joined the Better Cotton Initiative, a non-profit which opted to suspend its activities in Xinjiang last year on the back of concerns over human rights.
Adidas and other Western brands, including Nike and H&M, faced a backlash on Chinese social media following their comments regarding the situation in Xinjiang. Some Chinese consumers have boycotted the brands and opted instead to buy products from domestic companies.
Adidas did not explicitly refer to the issue in Friday’s earnings release, but did cite “adverse impacts” from issues including “the geo-political situation.”
Kasper Rorsted, CEO of Adidas, told CNBC that he still expects “very strong growth” from China for the year overall.
“So, we are still very confident we will continue to build our position in China, which is the single biggest market for us,” he told CNBC’s Squawk Box Europe Friday.
“This is of course a sensitive topic and we are doing whatever we can to make sure human rights are protected.”
However, despite the controversy, Rorsted said he does not think there will be a major shift in the company’s supply chains.