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Adidas Could Not Overcome Supply Chain, China, and COVID-19 Challenges in Q3; Shares Pricey

David Swartz Equity Analyst

Analyst Note

| David Swartz |

Narrow-moat Adidas fell short of our sales and margin expectations in 2021’s third quarter as COVID-19 lockdowns in parts of Asia, logistical delays, and slow sales in China overshadowed healthy underlying demand in North America and Europe, the Middle East, and Africa. The current outlook suggests Adidas may miss our full-year estimates of 19% sales growth and EUR 7.79 in EPS on continuing operations by a modest amount, but we still believe the activewear markets in the U.S., China, and elsewhere will continue to grow. Thus, we do not expect to make any material changes to our fair value estimates of EUR 209/$123. We view Adidas’ shares, down about 4% on the report, as overvalued.

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Company Profile

Business Description

Adidas designs, develops, produces, and markets athletic and leisure apparel, footwear, accessories, and sports equipment. Under its eponymous brand, it produces apparel for competitive athletics, casual activewear, and casual fashion. Its fashion brands include Yeezy, Ivy Park, and Y-3. Adidas sells its products in more than 160 countries through more than 2,400 owned retail stores, 15,000 mono-branded franchise stores, 150,000 wholesale doors, and more than 50 e-commerce sites. The company was founded in 1949 in Germany.

Adi-Dassler-Strasse 1
Herzogenaurach, BY, 91074, Germany
T +49 9132840
Sector Consumer Cyclical
Industry Footwear & Accessories
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 58,007