The company noted that, despite strong top-line growth, deteriorating traffic trends in Greater China as well as slowing consumer demand in major Western markets affected revenue. Adidas’ decision to suspend operations in Russia during Q1 also resulted in a revenue impact of over €100 million in the third quarter.

In Euro terms, Adidas reported revenue growth of 11% to €6.41 billion in the third quarter of 2022. Growth was driven by the direct-to-consumer channel, where currency-neutral sales grew by 6%. E-commerce alone increased by 8%, driven by strong double-digit increases in EMEA, North America, and Latin America

Wholesale revenues in the period were up by 3% and impacted by inventory takebacks of more than €200 million in Greater China as the company cleans up its full-price channel and clears excess inventory through its own factory outlets.

Revenue growth for the third quarter was driven by Western markets and the APAC region, which had a combined growth of 12%. In the EMEA region, revenue was up by 7% despite the loss of Russia while, in North America, revenues were up by 8%.

In APAC and Latin America, revenue growth reached 15% and 51% respectively. Meanwhile, development in China continued to be impacted by Covid restrictions, with a revenue decline of 17% for Greater China.

Adidas’ gross margin dropped by one percentage point to 49.2% in the third quarter, while its net income from continuing operations was €66 million.

The company’s outlook for the full 2022 financial year has been impacted by a further deterioration of traffic trends in Greater China, high clearance activity, one-off costs of around €500 million and its decision to terminate the Adidas/Yeezy partnership.

As a result, Adidas is now expected currency-neutral revenue growth at a low single-digit rate for 2022 as a whole, with a gross margin of around 47% and net income from continuing operations c. €250 million.

“The market environment shifted at the beginning of September as consumer demand in Western markets slowed and traffic trends in Greater China further deteriorated. As a result, we saw a significant inventory build-up across the industry, leading to higher promotional activity during the remainder of the year which will increasingly weigh on our earnings,” said Adidas CFO Harm Ohlmeyer.