Business

Supply chain issues to slow Adidas sales growth

HERZOGENAURACH, GERMANY: Adidas expects supply chain issues to curb sales growth in the first half of the year, particularly in North America, where it has doubled its business in the last three years to take market share from bigger rival Nike.

Adidas has put a big focus on the US market in recent years, teaming up with celebrities such as Kanye West, poaching designers from Nike and pushing retro styles that have proved more popular than Nike's basketball shoes.

But chief executive Kasper Rorsted said on Wednesday its suppliers have not been able to keep up, especially as Adidas has expanded from high-end products into more mid-priced clothing ranges in the US.

"The volume grew quicker than anticipated and we didn't respond quickly enough to that demand signal," Mr Rorsted told a news conference as Adidas presented 2018 results.

Those supply issues will knock €200 million (S$310 million) to €400 million, or 1 to 2 percentage points, off currency-neutral group sales growth in 2019, which is likely to slow to between 5 per cent and 8 per cent this year from 8 per cent last year.

In contrast, Nike has forecast sales growth for 2019 approaching low double digits as it rolls out a steady stream of popular new products, and German rival Puma a currency-adjusted 10 per cent.

Adidas produces 457 million pieces of apparel a year, sourcing most of them from Cambodia, China and Vietnam. Mr Rorsted said the shortages had nothing to do with US trade tensions with China. - REUTERS

BUSINESS & FINANCE