Adidas: Covid-19 brings down the Q1 results

  •   28/04/2020 - 11h38
  •   DEHOUI Lionel

The investors and shareholders who drive the global financial market have their eyes on the German market. While some groups are rejoicing, such as the German pharmaceutical company Bayer (up), others are far from rejoicing. Among the latter is German sports equipment manufacturer Adidas, which unveiled its figures on Monday. Let us recall here that it is a German company whose foundation dates back to 1949 and was carried out by Adolf Dassler. At that time, the group was known as Dassler Schuhfabrik with its headquarters in Germany, precisely in Herzogenaurach. His speciality remains the manufacture of sporting goods. Adidas is also called the "  brand of the three bandes " around the world because of the 3 parallel stripes on its logo. But let's come back to his balance sheet.

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Adidas: Covid-19 brings down the Q1 results
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Q1 figures

Indeed, the Adidas Group, which for a long time was a strong competitor to Nike, has drawn up its balance sheet for the first quarter (Q1). Although it has long been a leader in the sports equipment market, its net profit on its operations continues to plummet. For the period of the first quarter of 2020, the fall is 97%, or 20 million euros at the level of the said profit. This corresponds to 0.13 cents per share.


Adidas Group EPS

With these figures (Q1), it is obvious that the German group is not doing well in terms of EPS. It couldn't do like its German neighbour Bayer who was well above the consensus by more than 35 points. But, it should be noted that the two groups are not in the same industry. While the pharmaceutical sector is currently in a state of flux, the sports sector has been closed for quite some time.

This has heavily influenced the Adidas group. This group's EPS is well below the market consensus. Indeed, its EPS has remained at 70 cents of the market consensus. This is no longer a secret for anyone in the sports world. The Adidas Group has been largely influenced by the health crisis that has led to the closure of sports venues in the five major European championships.


Its operating margin

It is important to know that in 2019, the sports equipment manufacturer had more than 53 409 M€ as capital. It accumulated it thanks to its numerous sales in its multiple stores and its site. Note that it is present throughout the world with distributions of shoes, sportswear, sportswear and other sports equipment. On Monday, Adidas reported a 1.4% decline in operating profit for the first quarter of 2020.


Revenues down

The consequence of the fall in its operating margin is immediately announced by the group. It concerns all of its revenues, which are in decline due to the health crisis caused by Covid-19. According to the Adidas Group publication, its revenues are down by more than 19%. This is equivalent to more than 4.8 billion euros.


The CEO's comments

The CEO of the company Adidas expressed his sincere regrets about the situation of the group. It is Mr Kasper Rorsted who says that these results recorded in Q1 show the impact of Covid-19. It is devastating everything in its path, even companies that have long maintained good economic health are being challenged.