[Click eStock] Adidas Q3 Earnings Disappoint... "Recovery of Chinese Market is Key"

[Asia Economy Reporter Park Jihwan] IBK Investment & Securities evaluated Adidas on the 15th, stating that it experienced poor performance in the third quarter of this year, and that the recovery of the Chinese market will be crucial going forward.

Adidas's consolidated sales for the third quarter of this year increased by 3.4%, but operating profit decreased by 8.7%. In particular, sales in the Chinese market fell by 10.9%, and operating profit dropped by 24.8%, which contributed to the poor performance.

Hwang Byungjun, a researcher at IBK Investment & Securities, said, "Next year, overall sales are expected to grow in the low double digits of around 10%," adding, "This is because product prices will increase by an average of 4-6%, and offline traffic in Asia and patriotic consumption in China will gradually recover."

He also expressed that there is ample room for further profitability improvement. Profitability is improving due to advances in Europe and the United States, and the growth of D2C and the increase in the proportion of full-price sales continue, while supply disruption issues are expected to normalize from early next year.

Currently, despite low valuation burdens, concerns over prolonged weakness in China limit the momentum for stock price recovery. Since the operating profit proportion in China is in the high 20% range, ultimately, the recovery of China is considered key. Researcher Hwang Byungjun emphasized, "Although the recovery trend in Europe and the United States continues, they are vulnerable to supply disruptions, which are expected to persist until the end of the first quarter next year," adding, "If China does not show meaningful recovery by the second quarter of next year, the advances in the US and Europe are likely to remain short-term momentum only."

This content was produced with the assistance of AI translation services.