Brushing aside concerns over the impact of the boycott in the Chinese market, German sportswear brand Adidas has raised its 2021 sales forecast. The company is betting on upcoming sports events to drive demand for its products in the months ahead.
The company said that it is seeing sales grow at a high-teens percentage rate this year, which is an improvement from its March forecast for mid-to-high teen growth. It expects sales to jump by around 50 percent in the second quarter due to big sporting events such as the European soccer championship and Copa America.
Sales in Q1 rose 20 percent to reach $6.35 billion, which was higher than the $6 billion analysts had reportedly predicted. The company’s net income, meanwhile, increased to $607 million.
Adidas’ revised forecast comes despite the ongoing boycott the brand is facing in China over its decision not to source cotton from Xinjiang after reports exposed China’s abuse of Uyghur Muslims in the region.
“A slight upping of 2021 organic growth guidance suggests that concerns around the … damage to Chinese prospects appear overblown,” Jefferies analyst James Grzinic told Reuters.
While Adidas refrained from mentioning the issue in its revised sales forecast, the company noted that its new outlook took geopolitical situations into account, industry-wide supply chain issues, as well as the effects of prolonged lockdowns in Europe.
Other players, such as Puma that had originally expected the Chinese boycott to impact sales, are now also starting to feel confident again.