From the Sector

• Currency-neutral sales up 4%, despite more than € 300 million negative impact from macroeconomic constraints
• Markets representing more than 85% of the business grow 14% overall
• Gross margin down 1.5pp to 50.3% reflecting significantly higher supply chain costs
• Operating profit reaches € 392 million
• Net income from continuing operations amounts to € 360 million
• FY 2022 outlook reflects double-digit growth during the second half of the year

“Our Western markets continued to show strong momentum in the second quarter amid heightened macroeconomic uncertainty. With Asia-Pacific returning to growth, markets combined representing more than 85% of our business grew at a double-digit rate,” said adidas CEO Kasper Rorsted. “With sports back at center stage this summer, revenues in our strategic growth categories Football, Running and Outdoor all increased by double digits. However, the macroeconomic environment, particularly in China, remains challenging. The recovery in this market is – due to continued covid-19-related restrictions – slower than expected. And we have to take into account a potential slowdown in consumer spending in all other markets for the remainder of the year.”

Currency-neutral revenues increase 4% despite macroeconomic constraints
In the second quarter, currency-neutral revenues increased 4% as adidas continued to see strong momentum in Western markets. This growth was achieved despite continued challenges on both supply and demand. Supply chain constraints as a result of last year’s lockdowns in Vietnam reduced top-line growth by around € 200 million in Q2 2022. In addition, the company’s decision to suspend its operations in Russia reduced revenues by more than € 100 million during the quarter. Continued covid-19-related lockdowns in Greater China also weighed on the top-line development in Q2. From a channel perspective, the top-line increase was to a similar extent driven by the company’s own direct-to-consumer (DTC) activities as well as increases in wholesale. Within DTC, e-commerce, which now represents more than 20% of the company’s total business, showed double-digit growth reflecting strong product sell-through. From a category perspective, revenue development was strongest in the company’s strategic growth categories Football, Running and Outdoor, which all grew at strong double-digit rates. In euro terms, revenues grew 10% to € 5.596 billion in the second quarter (2021: € 5.077 billion).

Strong demand in Western markets
Revenue growth in the second quarter was driven by Western markets despite last year’s lockdowns in Vietnam still reducing sales, particularly in EMEA and North America, by
€ 200 million in total. In addition, the top-line development in EMEA was also impacted by the loss of revenue in Russia/CIS of more than € 100 million. Nevertheless, currency-neutral sales grew 7% in the region. Revenues in North America increased 21% during the quarter driven by growth of more than 20% in both DTC and wholesale. Revenues in Latin America increased 37%, while Asia-Pacific returned to growth. Currency-neutral revenues increased 3% in this market despite still being impacted by limited tourism activity in the region. In contrast, the company continued to face a challenging market environment in Greater China, mainly related to the continued broad-based covid-19-related restrictions. As a result, currency-neutral revenues in the market declined 35% during the three-months period, in line with previous expectations. Excluding Greater China, currency-neutral revenues in the company’s other markets combined grew 14% in Q2.

Operating profit of € 392 million reflects operating margin of 7.0%
The company’s gross margin declined 1.5 percentage points to 50.3% (2021: 51.8%). Significantly higher supply chain costs and a less favorable market mix due to the significant sales decline in Greater China weighed on the gross margin development. This could only be partly offset by a higher share of full price sales, first price increases and the benefits from currency fluctuations. Other operating expenses were up 19% to € 2.501 billion (2021: € 2.107 billion). As a percentage of sales, other operating expenses increased 3.2 percentage points to 44.7% (2021: 41.5%). Marketing and point-of-sale expenses grew 8% to € 663 million (2021: € 616 million). The company continued to prioritize investments into the launch of new products such as adidas’ new Sportswear collection, the next iteration of its successful Supernova running franchise and first drops related to the Gucci collaboration as well as campaigns around major events like ‘Run for the Oceans.’ As a percentage of sales, marketing and point-of-sale expenses were down 0.3 percentage points to 11.8% (2021: 12.1%). Operating overhead expenses increased by 23% to a level of € 1.838 billion (2021:
€ 1.492 billion). This increase was driven by adidas’ continuous investments into DTC, its digital capabilities and the company’s logistics infrastructure as well as by unfavorable currency fluctuations. As a percentage of sales, operating overhead expenses increased 3.5 percentage points to 32.8% (2021: 29.4%). The company’s operating profit reached a level of € 392 million (2021: € 543 million), resulting in an operating margin of 7.0% (2021: 10.7%).

Net income from continuing operations reaches € 360 million
The company’s net income from continuing operations slightly declined to € 360 million (2021: € 387 million). This result was supported by a one-time tax benefit of more than € 100 million due to the reversal of a prior year provision. Consequently, basic EPS from continuing operations reached € 1.88 (2021: € 1.93) during the quarter.

Currency-neutral revenues on prior year level in the first half of 2022
In the first half of 2022, currency-neutral revenues were flat versus the prior year period. In euro terms, revenues grew 5% to € 10.897 billion in the first six months of 2022 (2021:
€ 10.345 billion). The company’s gross margin declined 1.7 percentage points to 50.1% (2021: 51.8%) during the first half of the year. While price increases as well as positive exchange rate effects benefited the gross margin, these developments were more than offset by the less favorable market mix and significantly higher supply chain costs. Other operating expenses increased to € 4.759 billion (2021: € 4.154 billion) in the first half of the year and were up 3.5 percentage points to 43.7% (2021: 40.2%) as a percentage of sales. adidas generated an operating profit of € 828 million (2021: € 1.248 billion) during the first six months of the year, resulting in an operating margin of 7.6% (2021: 12.1%). Net income from continuing operations reached € 671 million, reflecting a decline of € 219 million compared to the prior year level (2021: € 890 million). Accordingly, basic earnings per share from continuing operations declined to € 3.47 (2021: € 4.52).

Average operating working capital as a percentage of sales slightly decreases
Inventories increased 35% to € 5.483 billion (2021: € 4.054 billion) at June 30, 2022 in anticipation of strong revenue growth during the second half of the year. Longer lead times as well as the challenging market environment in Greater China also contributed to the increase. On a currency-neutral basis, inventories were up 28%. Operating working capital increased 23% to € 5.191 billion (2021: € 4.213 billion). On a currency-neutral basis, operating working capital was up 14%. Average operating working capital as a percentage of sales decreased 0.4 percentage points to 21.0% (2021: 21.4%), reflecting an overproportional increase in accounts payable due to higher sourcing volumes and product costs.

Adjusted net borrowings at € 5.301 billion
Adjusted net borrowings amounted to € 5.301 billion at June 30, 2022, representing a year-over-year increase of € 2.155 billion (June 30, 2021: € 3.146 billion). This development was mainly due to the significant decrease in cash and cash equivalents.

FY 2022 outlook reflects double-digit growth during the second half of the year
On July 26, adidas adjusted its guidance for FY 2022 due to the slower-than-expected recovery in Greater China since the start of the third quarter resulting from continued widespread covid-19-related restrictions. adidas now expects currency-neutral revenues for the total company to grow at a mid- to high-single-digit rate in 2022 (previously: at the lower end of the 11% to 13% range), reflecting a double-digit decline in Greater China (previously: significant decline). While so far the company did not experience a meaningful slowdown in the sell-through of its products or significant cancellations of wholesale orders in any market other than Greater China, the adjusted guidance also accounts for a potential slowdown of consumer spending in those markets during the second half of the year as a result of the more challenging macroeconomic conditions. Therefore, growth in EMEA is now expected to be in the low teens (previously: mid-teens growth), while revenues in Asia-Pacific are projected to grow at a high-single-digit rate (previously: mid-teens growth). Despite the more conservative view on the development of consumer spending in the second half of the year, adidas has increased its forecasts for North America and Latin America reflecting the strong momentum the brand is enjoying in these markets. In North America, currency-neutral revenues are now expected to increase in the high teens. Sales in Latin America are projected to grow between 30% and 40% (both previously: mid- to high-teens growth).   

Due to the less favorable market mix and the impacts from initiatives to clear excess inventories in Greater China until the end of the year, gross margin is now expected to reach a level of around 49.0% (previously: around 50.7%) in 2022. Consequently, the company’s operating margin is now forecast to be around 7.0% (previously: around 9.4%) and net income from continuing operations is expected to reach a level of around € 1.3 billion (previously: at the lower end of the € 1.8 billion to € 1.9 billion range).

adidas Basketball in collaboration with basketball GOAT and legend, Candace Parker , unveils the new Candace Parker Collection Part II with retail partner DICK’S Sporting Goods. Rooted in a shared commitment to empower aspiring women athletes and hoopers – who like Parker set out to create their own legacy, the encore collection is the embodiment of Parker’s evolution on-and-off the court melding Ace’s style and performance insights for the next generation player.

The Candace Parker Collection Part II launches with the all-new Exhibit B, arriving in three custom colorways employing Lightstrike cushioning for fluid and dynamic handling. Each iteration of Parker's Exhibit Bs are inspired by her personal journey beginning with the “For Lailaa Nicole” receiving emerald green with silver accents in honor of her daughter. As for Parker, it’s not about “wearing the crown,” but about “sharing it” resulting in “Game Royalty”, a purple and gold colorway representing African queens followed by an ash blue and shadow navy for “Windy City” version signifying the hometown hero’s 2022 league title and rounded out by three unique Exhibit B “Elevated Team” colorways emphasizing the magic of teamwork.

The Candace Parker Collection Part II is an elevation for the new generation of athletes completed with a vibrant combination of pre to post-game apparel offerings including signature Ace sweatsuits, cropped jackets and hoodies, all paired with an assortment of tees and shorts that harken back to pivotal moments in Parker’s career. The return of inclusive sizing is paramount and purposeful, allowing Parker’s vision for expanded access to female and non-binary athletes who’ve traditionally had to size down to access men’s basketball apparel and footwear.

As Y-3 continues its ongoing 20th Anniversary celebrations, adidas and Yohji Yamamoto return to present the brand’s third seasonal offering. Building on the “20 Years: Re-Coded” thematic narrative, Chapter 3 is an auspicious ode to one of the brand’s most iconic colors – Orange – as Y-3 delves into the past in order to boldly envisage a visceral new future.

Audaciously exploring the theme of collective memory, the latest offering from Y-3 sees adidas and Yohji Yamamoto delve into their shared past to consider Memories of Orange . A synonymous symbol for Y-3, Orange has been the primary color of the brand’s logo for many years. For Fall/Winter 2022 Chapter 3, the brand shines a light on this most iconic of signifiers, contrasting the luminosity of the pantone with black and neutral palettes, while simultaneously incorporating evocative references to a sport that has remained an unending influence – football.

The seasonal offering is highlighted by a selection of pieces that feature contrasting logos, bold blocking, and, of course, fluorescent Orange color palettes. Conceived as a harmonious cacophony of contrasts, the collection also boasts new takes on football crest logos and reimagined team sponsor graphics. Meanwhile an array of dynamic footwear sees the Y-3 HOKORI III , the Y-3 ULTRABOOST 22 , and a bright Orange colorway of the iconic Y-3 QASA take center stage, as well as ushering in the arrival of the brand’s expressive take on an archival adidas classic: the Y-3 GAZELLE .

Accompanying the launch of Fall/Winter 2022 Chapter 3 is a powerfully energetic campaign shot by Thue Nørgaard with creative direction from Jamie Reid and styling from Robbie Spencer. Representing a continuation of the aesthetic language established in Chapters 1 & 2 the expressive visuals focus on control, determination, and boldness of spirit. Featuring a carefully chosen cast of rebellious figures, the models recode sporting movement as an artistic expression through explosively choreographed gestures. Warm lighting, meanwhile, is expressed through a digital backdrop composed of two different shades of orange and a nostalgic pastel blue, which come together to reference a sun at dawn. The result – a flood of luminescence that is at once an allusion to Y-3’s emergent beginnings and an ode to the brand’s original color.

C.L.A.S.S. will join forces with Milano Unica, 12-14 July, to push the change towards a new generation of fashion through its C.L.A.S.S. SMART SHOP: an online space offering eco-high-tech materials representing a range of categories able to create a new generation of fashion. It is dedicated to students, designers and new generation brands who want to explore and test premium materials mixing style, innovation and responsibility

The C.L.A.S.S. SMART SHOP partners exhibiting at Milano Unica are: ALBINI GROUP, ILUNA GROUP and ZIGNONE.

90 years of BOGNER are celebrated with the Anniversary Capsule Collection Frozen Riviera. Frozen Riviera draws inspiration from the pioneering figure of Maria Bogner, the woman who made the mountains chic. BOGNER not only adored the Riviera, but also supplied its leading style icons with their winter wardrobes.

The result is a Cross Capsule Collection of BOGNER Sport and Fashion, that represents the future heritage of the brand. A palette of rich blues and off-white is enlivened by gold trim details, depicting an abstract print pattern of waves and slopes that underlines the connection between the Mediterranean and the Alps.

The iconic silhouettes of the past 90 years are reinterpreted for winter and combined with new volumes, techniques and materials - always with an eye to the future. Characterized by modern silhouettes, tonal outfits and a look of loose elegance, BOGNER heritage details meet the latest innovations. The result: Athluxury Sports Fashion.

adidas reveals the Juventus home jersey for the 2022/23 season. The classic black and white stripes are reimagined with a new graphic element to represent the magic of Allianz stadium.

Since the team’s move to the stadium in 2011, fans have enjoyed countless moments of magic at the venue. For this season, in a new dynamic interpretation of the club’s identity, the jersey draws inspiration from the five triangles of the star as symbol of magic, creating a new visual icon.

The new jersey is made with 100% recycled materials and features the latest in adidas’ temperature regulation innovation, HEAT.RDY – KEEP COOL, which is designed to keep players feeling cool, dry, and confident during play by optimizing sweat distribution and maximizing airflow.

The replica shirt offers similar benefits thanks to the inclusion of AEROREADY – KEEP DRY technology, keeping fans comfortable and ready as it manages the body’s sweat for a dry feeling.

ECOSENSOR™ by Asahi Kasei Advance presents its SS 2023 collection, made of high-tech fabrics implementing new-generation values, with the aim of keeping nature, body and mind in harmony at Performance Days.

ECOSENSOR™ presents 40 new references that meet the needs of the contemporary consumer, such as durability, wellbeing and performance. Being capable of combining active climate control, exquisite touch, lightness and comfort with sustainable values, ECOSENSOR™ stands out as a unique eco-high-tech performance proposition in its market. The collection covers the different market applications with 7 items for INNERWEAR, 2 for OUTERWEAR, 17 for SPORT KNIT and 14 for SPORT WOVEN.

All of ECOSENSOR™ fabrics are made with sustainable materials which are certified by internatinal certification such as GRS, RCS or self-certification by each yarn supplier, through a traceable and transparent production process and supply chain.
100% of the stretch articles (representing 35% of the collection) are made with ROICA™ EF by Asahi Kasei, the recycled stretch yarn made from pre-consumer materials.
 
The main fibers are GRS certified recycled polyester and recycled polyamide, but the collection also features some blends, such as in Bemberg™, the high-tech yarn born from the transformation of cotton linters through a circular, transparent and traceable process with a precious hand, optimal moisture management characteristics,  whose end of life guarantees its biodegradability.
Even the dyeing and finishing phases - key moments for performancewear - have been certified by international labels such as bluesign® or OEKO-TEX® Standard 100.

Chemistry plus creativity” is Officina39’s new tagline expressing the most important values at the core of the company’s approach, founded on a deep understanding of sustainability. Embracing the “plus” that used to feature as part of the Officina39 logo, it now takes the shape of a true formula of innovation that echoes throughout the renovated brand look that the company is introducing for the first time at Kingpins.

The latest addition to the Trustainable™ collection is Aqualess Fade, a technology that recreates the bleaching effect of chlorine on fabrics, a waterless special compound for the discoloration of denim on indigo/black garments which is reducing resource consumption and environmental impact. This innovation completes and integrates Aqualess Mission, a combination of technologies that allows garment laundry processes to reduce 75% of the water use.

Traditional systems usually use about 52 liters of water for a pair of jeans, while Officina39’s cutting-edge technology employs only 12.5 liters without affecting the quality of the final product. Until now, the process included three eco-friendly technologies: Novascraper Indigo, a laser finishing technique that adds a natural, vintage look to denim garments; OZ-ONE Powder, an advanced product to give garments a bleached yet eco-friendly treatment, for a worn and distressed look; and Aqualess Aged, a waterless compound to give denim abrasion effects.

“In our field, the word “less” is to be found pretty much everywhere you look: less water, less energy, less impact and the list goes on. So I asked myself if we could work on implementing the word “plus” in this collection.” stated Stefano Parrotta, Officina39 Technical Manager. “And the answer, of course, was yes: we thought of all the ways in which the idea of more (plus) best represents what we do – more passion, more creativity, more collaboration, more inspiration, more Officina39. I think it is important to look for what the industry needs more of and the word “plus” perfectly embodies that!”

Sitip confirms for the third year its partnership with SCOTT Racing Team in the production of the team uniform created in collaboration with ROICA™ EF of Asahi Kasei and Rosti.

The partnership was born in 2019 and celebrated during Ispo 2020, which returns for the third consecutive year to re-propose an exclusive and special uniform, designed to be extremely performing but also, and entirely, eco-sustainable.

Starting from the performance requirements of athletes, who need highly technical fabrics extremely breathable, comfortable on the skin, resistant and with perfect shape retention able to support them in competitions, Sitip has chosen the fabrics of its Native Sustainable Textiles line - technology which applies to fabrics produced with recycled yarns and chemicals with low environmental impact, implementing the GRS (Global Recycle Standard) standard, with Asahi Kasei’s premium ROICA™ EF stretch yarn.

This line includes NATIVE-BICIMANIA and NATIVE-PIRATA, two GRS-certified recycled polyester fabrics chosen for the production of the uniform shirt, enriched by Microsense Soft Performance technology - able to guarantee the product a delicate softness and maximum comfort on the skin.

This year the absolute novelty is represented by the shorts, for a complete uniform: made with the NATIVE-THUNDERBIKE POWER fabric, designed for high performance sports, in recycled polyamide and always with the ROICA™ EF yarn by Asahi Kasei.

• Where performance and responsibility all together become the new norm
• Discover ROICA™ groundbreaking innovations in the sports field, and the bold partnerships that made them possible

Today ROICA™ main objective is to focus on and respond to new generation values in fashion. Values that are key for contemporary consumers, who are the ones leading the change throughout all the supply value chain, and have received even more attention since the beginning of the pandemic. ROICA™ by Asahi Kasei team knows that value creation is the basic foundation of contemporary business. Its teams are ready to go to the next level, answering to the market demand for top-notch innovation while sharing its responsibility efforts towards the new generation of consumer.

For this reason, the ROICA™ strategy is based on two key elements. On the one side, a strong focus on responsible innovation, able to respond to new fashion needs and desires while not harming the environment nor the society at large. On the other hand, a consolidation of partnerships along the whole supply chain through conversations and collaborations with companies sharing the ROICA™ values, in order to deliver creativity, solutions and design to all contemporary consumers.

It is of the utmost importance to share the current wardrobe stories developed and offered to contemporary consumer throughout our ROICA™ supply chain efforts. Starting from the various applications of ROICA™, from the fibre down to the outfits, passing from fabrics and manufacturing.

Activation
Performance sportswear styles for Gym, Athletics, Cycle wear, Athleisure as well as mindful Yoga and Exercisewear. Its main keywords are freedom, fit, performance and responsibility. Among the brands recurring to this application we can find:

- Edelvissa is an emerging all-Italian brand, born in the heart of Milan. The designer Elisabetta Bianco, who grew up under the wings of her grandfather and father, both expert knitters, decided to found a reality that would fully represent her vision of luxury homewear. Flanked by her partner and her brother, Elisabetta created a brand with a transparent soul, based on the quality of materials, complete product traceability and social and environmental sustainability. From the heart of Milan, Edelvissa aims to share the centuries-old textile culture and the high Italian craftsmanship tradition. In its first collection, a crop top with a beautiful embroidery of blooming flowers and a pair of comfortable, yet stylish leggings are both crafted from a Maglificio Ripa fabric developed with Q-NOVA® BY FULGAR recycled polyamide and ROICA™ EF* recycled stretch yarn, both GRS certified. Maglificio Ripa is a premium partner of ROICA™.

- Scott Racing Team: A partnership born in 2019 and celebrated at Ispo 2020, based on two premium partnerships: Rosti for the style and manufacturing, ROICA™’s partner Sitip for technical fabrics made from GRS (Global Recycled Standard) certified recycled yarns including ROICA™ EF*, the certified recycled stretch ingredient produced by Asahi Kasei. A synergy that has given life to high-tech clothing, customized for this team able to face the climatic conditions and the performances necessary to face the activity in the summer season: light resistance as well as maximum comfort. In addition to the values of sustainability, high performance, breathability, comfort on the skin, shape  retention and resistance, ease of maintenance, style and ergonomics, there is now the commercial distribution of the uniform, which finally passes from the team to the end consumer who can purchase it exclusively on the Rosti e-shop.