German sporting goods maker Adidas has cut its full-year guidance, citing weaker expectations for China, lower demand in major Western markets and one-off expenses related to its exit from the Russian market.
The company now expects currency-neutral revenues to grow by a mid-single-digit percentage in 2022, down from a mid- to high-single-digit percentage forecast previously.
Its operating margin is seen at 4%, down from 7%.
The company blamed a "further deterioration of traffic trends in Greater China, as well as a significant inventory build-up as a result of lower consumer demand in major Western markets since the beginning of September", it said.
The new outlook reflects one-off costs of around €500m on its net income in 2022, Adidas added, saying these expenses were largely due to the company's decision to initiate the wind-down of its Russian business.
Adidas's third-quarter sales increased 11% to €6.4 billion, but its net income for the full year is expected to reach €500m, compared with its previous estimate of €1.3 billion.
Currency-neutral sales in Greater China declined by a double-digit percentage due to continuing Covid-related restrictions, as well as significant inventory takebacks, the company said.
With measures in place to protect the company's profitability, Adidas expects to generate a positive profit contribution of around €200m in 2023.
The change in outlook comes after the company announced on October 6 that it had put its business partnership with rapper and fashion designer Kanye West under review.