Finimize - 🇨🇳 Adidas loses China

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Today's big stories

Adidas posted worse-than-expected results, but it’s looking forward to this year
The oil crisis might not be the boon for the electric vehicle market that you think it is – Read Now
Cathay Pacific reported another full-year loss for 2021

Positive Energy

What’s Going On Here?

Adidas posted weaker-than-expected full-year results on Wednesday, but the sportswear giant is still feeling pumped about the year ahead.

What Does This Mean?

Like most companies, Adidas was up against pandemic-induced shortages and supply chain issues last year. But unlike most companies, it also had to deal with a boycott of its goods in China – a market that makes up over a fifth of its sales. That’s a dastardly combination, and it added up to about $1.7 billion in lost revenue over the course of 2021. That might be why its total sales only climbed 16% last year – short of the 18% it was hoping for. And now that Adidas has stopped selling in Russia, it reckons it’ll sacrifice some growth this year too. Not that the revelation seemed to knock its confidence: Adidas’s revenue outlook for 2022 was still much better than analysts were expecting.

Why Should I Care?

Zooming in: Adidas goes local.
Adidas’s Chinese sales grew just 3% last year, as customers turned to local brands like Anta Sports and Li Ning instead. That seems to be part of a wider trend: a handful of China’s top sneaker brands collectively grew their revenue by 17% last year, while foreign rivals saw theirs shrink by 24%. Still, at least Adidas can tap into some local know-how going forward: it just hired a new head of Chinese operations with a track record of boosting brands in the region.

The bigger picture: Lululemon’s stepping it up.
Footwear has always made up a big part of Adidas’s sales, but it’s facing new competition on that front: Lululemon announced earlier this week that it’s launching its first sneaker – a running shoe for women – later this month (tweet this). The athleisure brand is planning to expand into men’s sneakers next year, and analysts seem to agree that it could be a smart way to gain ground on the sportswear giants.

You might also like: How to analyze Adidas’ stock in under two hours.

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Analyst Take

What Investors Are Getting Wrong About The EV Market

Reda, Analyst

What’s Going On Here?

The conflict in Ukraine sent the price of oil to a 14-year high earlier this week.

And that’s led plenty of investors to conclude that surging oil prices will cause prices at the gas pump to rise, which should incentivize more people to switch to electric vehicles (EVs).

So far, so obvious.

But if you’re what Howard Marks calls a “second-level thinker”, you’ll see past this conclusion and realize that there might be more factors working against EVs than in their favor.

That’s today’s Insight: what investors are getting wrong about the EV market, and why you should be wary.

Read or listen to the Insight here

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