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).

Indorama Ventures Public Company Limited (IVL) named the winners of ‘RECO Young Designer Competition’, Thailand's largest upcycling fashion design event, parading haute couture garments containing at least 60% recycled materials.

Eleven finalists showcased 33 handmade sustainable outfits at the 9th edition of the fashion show at IVL’s headquarters in Bangkok, using recycled PET and polyester items to craft creative fashions. Under the concept of ‘REVIVE: Start from the Street,’ RECO supports young Thai designers while raising awareness of recycling. The designs use a range of recycled materials including recycled PET yarns, discarded fabric from factories, and even repurposed safety belts.

RECO awarded finalists and winners with 500,000 baht in prizes to support their careers. First prize of 125,000 baht was awarded to 23-year-old emerging furniture designer Prem Buachum for his ‘The Origin of Rebirth’ collection, using fabric recycled from post-consumer PET bottles. The first runner-up, Sathitkhun Boonmee, was awarded 75,000 baht for his ‘Remembering Your Favorite Teddy Bear’ collection, using old dolls made of polyester fibers. Second runners-up, Worameth Monthanom and Tanakorn Sritong, received 50,000 baht for their ‘Regeneration of Nature (into Spring)’ collection, using unused fabrics and discarded PET film. Napat Tansuwan, a finalist with his’ Don’t Judge’ collection, will go on to create designer merchandise for sponsor Buriram United Football Club using local weaving techniques from communities in Buriram province.

Mrs. Aradhana Lohia Sharma, Vice President at Indorama Ventures and RECO Young Designer Competition Chairperson, said, “Since 2011, RECO's ambition has been to uplift recycling and inspire people to realize the value of recyclable materials to produce great new products for daily life. We have witnessed many thoughtful initiatives on upcycling through the collections created by our talented young Thai designers. The designs this year showcase stunning wearability and innovation while using a large percentage of recycle materials. Public interest in recycling has been growing immensely, and we are grateful to strengthen the relationship with partners like Buriram United Football Club.”

“Indorama Ventures hopes this competition will be a driving force in nurturing sustainable fashion concepts and increasing the acceptance of recycled materials, especially post-consumer PET. We are proud to be a stepping-stone for our youth's design journey and our community’s sustainable future.”

• Focus on straightening technology and process control

At Indo Intertex, held from 10 to 13 August in Jakarta, visitors get to see the Mahlo-way for process control in textile production. The German machine manufacturer and its partner agency Agansa Primatama will be available to show everyone its leading straightening technology as well as energy saving concepts around the stenter frames. INDO INTERTEX is South East Asia’s largest trade show on the textile and garment industries, bringing together leaders to experience world-class manufacture, technology and solutions.

Indonesia is one of the ten biggest textile producers in the world. Especially the USA, the European Union and Japan import a majority of their requirements from the Southeast Asian Island state. In order to fulfill the increasing demands and the call for high quality goods, producers invest in machinery, equipment and technology.

At IndoIntertex, Mahlo informs about its straightening machine Orthopac RVMC-15, among other. Based on experience reaching back to over 75 years, the machine offers the latest technology for correcting distortions. The modular straightening and process control system ensures a straight-thread product before and after the drying or fixing process and optimises the processes all around the stenter. This increases quality and saves resources and energy. The process control system Optipac VMC-15 measures and controls critical parameters such as dwell time, thread density or residual moisture.

The FACHPACK in Nuremberg ranks among the most important packaging industry gatherings. From 27 to 29 September 2022, Sappi will be presenting its latest products and solutions for functional paper packaging, flexible packaging papers, label papers, containerboard and paperboard. The company is focusing its efforts on sustainable, recyclable and innovative solutions.

• Wide range of barrier papers in the market for sustainable and recyclable packaging solutions
• High-impact brand presence in corrugated board packaging thanks to Fusion Nature Plus in combination with Fusion Topliner
• Parade Label Pro wet-glue label paper for an efficient operation and an excellent visual impression

Wide range of barrier papers
Sappi’s ultimate goal as a specialist in barrier papers is to replace non-recyclable aluminium and plastic multi-layer laminates through the introduction of truly sustainable alternatives that meet all market requirements in terms of performance and recycling. Sappi is continuously expanding its portfolio of barrier papers. At the show, Sappi will be showcasing several examples of food and non-food applications using these barrier papers.

A smooth surface and a high degree of whiteness: Parade Label Pro
Sappi will also be presenting its new, non-wet-strength wet-glue label paper Parade Label Pro – featuring samples from all over the world. This glossy, double-coated quality paper offers a smooth surface plus a high degree of whiteness. It’s suitable for numerous label and flexible packaging applications, such as labels for disposable bottles, food and non-food containers as well as wrappers for a variety of products. It can be printed in offset, flexo and gravure, and finished with hot foil and blind embossing, for example.

Brand presentation that appeals to the senses
“For manufacturers of branded goods, it is becoming increasingly important to convey brand values and product characteristics in a way that is emotionally appealing and that really sets the stage,” explains Luis Mata, Sales Director Packaging of Sappi Europe. At the FACHPACK, Sappi will also be presenting its containerboard products for corrugated board applications, which, with their brilliant colour reproduction, enhance on-shelf product impact and ensure real brand differentiation.

Sappi’s popular Algro Design paperboard portfolio also allows the design scope and leeway to communicate brand values in an emotionally appealing way.

Kornit Digital Ltd. (NASDAQ: KRNT) (“Kornit”), a worldwide market leader in sustainable, on-demand digital fashionx  and textile production technologies, has opened the doors to a new interactive booth  at one of the world’s largest virtual printing tradeshows – Printing Expo Online 2022. The exhibit offers all the benefits of a physical tradeshow, but with convenient, online access any time.

Printing Expo Online is one of the most popular online tradeshows for the printing industry. Tailored to meet the demands of evolving businesses, the show is open 24-7-365 days a year – and has welcomed over 60,000 global visitors since November 2020. Kornit’s virtual exhibit is fully aligned with customer requests for a more flexible tradeshow experience – allowing participation at their convenience.

The multi-story showroom makes it possible to self-navigate across Kornit’s game changing single-step, digital direct-to-garment (DTG) and direct-to-fabric (DTF) solutions – unlocking new possibilities for on demand, sustainable digital fashion and textile production. Solutions on display include  Kornit Atlas MAX, the recently introduced Kornit Atlas MAX Poly, Kornit Presto MAX and the KornitX Workflow offering.

Checkpoint Systems, a provider of source to shopper solutions to the retail industry, has announced the launch of the OPAL Tag. The new pinless article surveillance solution facilitates the protection of footwear, sportswear, outdoor equipment and other hard-to-protect goods.

The one-piece OPAL Tag, developed by Checkpoint’s Alpha High Theft Solutions division, uses a unique locking mechanism that includes small rubber pads. This pinless solution is suitable for a range of goods – including footwear, sportswear, outdoor clothing as well as outdoor and athletics equipment – as it ensures that the device does not damage the items when it is attached or removed.

In addition, the OPAL Tag has two other advantages: It is easy for store associates to apply and remove with just one hand, optimising workflows - and it is unobtrusive, improving the customer experience. For example, if it is attached to a shoe, the customer can still try on the item without having to ask staff for help.

Proven security features
Besides the new, optimised handling, the OPAL Tag has a bandwidth of security features that have proven successful for retailers in preventing theft. These include flashing LED lighting to deter potential thieves, showing them that the security device is live. The OPAL solution is also equipped with Alpha 2 Alarm technology, meaning that an alarm will sound if the device passes by an EAS antenna. Attempts at tampering are also detected in this way.

• Sustainability Report 2021 combines financial and non-financial performance indicators
• 2011-2021: 60% reduction in greenhouse gas emissions per metric ton produced. 51.7% renewable source energy achieved
• ESG criteria (environmental impact (E), social values (S), organizational governance (G)) determine sustainability strategy

The new RadiciGroup Sustainability Report has been published. With the goal of continuous improvement, the 2021 report has a broader reporting boundary compared to prior years and takes into consideration all the Group companies, including sales and service companies. Over 30 sites located across Asia, North America, South America and Europe have provided their 2021 data on economic, social and environmental performance.

Not only indicators of a financial nature but also measures of environmental impact (E), social values (S) and good organizational governance (G): the latter so-called ESG criteria have become a priority for RadiciGroup, which is preparing for the new European Union non-financial reporting directive in order to contribute to the transition towards a fully sustainable economic system and increase the value of its companies.

On the environmental front, the themes of climate change and decarbonization are RadiciGroup priorities and part of a policy aimed at the uncoupling of growth and resource usage. The Group undertakes to lower emissions from production and choose limited-impact energy sources. This commitment is confirmed by the numbers: in the 2011-2021 period, total emissions per metric ton produced were reduced by 60%, while renewable source energy used by the Group reached 51.7%. Specific investments to decrease environmental impact are ongoing: in 2021, EUR 3.1 million were allocated to introduce best available techniques and improve emissions abatement and energy efficiency.

RadiciGroup promotes professional growth by valuing competence and investment in training: Group training hours once again rose after the pandemic period from 36,000 hours in 2020 to 46,000 hours in 2021. The training method was often a hybrid, taking advantage of aspects experimented with during the pandemic, that is, less traveling and use of facilities in favour of higher groupwide attendance, without the need for participation limits. Fifty-five percent of total training hours was dedicated to health and safety, which has yielded positive results based on the related indicators.

Angelo Radici, president of RadiciGroup: “Today, the United Nations 2030 Agenda for Sustainable Development is our main guideline on sustainability issues. It shows us an ambitious scenario and urges us to confront a multitude of challenges that affect our enterprise from every point of view. We try to be quick to react and tenacious, staying faithful to our roots and our style, but expanding our perspective to become increasingly more competitive and proactive in the businesses we are engaged in. From the viewpoint of achieving less environmental impact in the future, we propose to be an enabler and facilitator for our stakeholders on themes such as the circular economy, where we see ourselves as protagonists in ecodesign and recycling, as well as innovation, which we put at the service of anyone who is processing and using our products, so as to offer real sustainability solutions together.”

The new Swedish luxury womenswear brand presented its first couture runway show, ‘Midnight in the Persian Garden’, in the Salle des Textiles of Paris’ Musée des Arts et Métiers on Thursday, July 7th at 10.30am CET.

As earthly manifestations of an imaginary paradise, where architecture and horticulture were brought together into meticulous perfection, the Persian garden was the point of inspiration for ArdAzAei’s debut couture collection.
A poetic ode to the transcendent beauty of nature, ‘Midnight in the Persian Garden’ honours the incredibly complex systems of engineering required to create such sublime spaces through couture’s intricate techniques of smocking, pleating, embroidery, and appliqué.
 
An evening wear collection of red-carpet gowns and cocktail dresses, tailoring, jewellery and accessories, the collection sees a recurring reference to the Persian Rose and the Parrot Tulip, with the flowers informing silhouettes, three-dimensional sculptural forms, and elaborately embroidered jacquard.
 
Sharp tailoring in the form of contemporary women’s suits see sleek jackets and flared pants with hypnotic floral patterning evoking the undulating chaos of nature’s rhythms.
 
Another key theme running throughout the collection is the dynamic between mathematic forms of composition—a key element of Persian garden architecture—and the craft of the handmade, evident in crystal sequins custom-cut to the lines of the ArdAzAei logo, designed by M/M (Paris), which are then hand-embroidered to create organic forms.
 
The dynamic is also evident in an evening dress which sees 60 metres of fabric pleated and cut into geometric shapes appliqued to its top, while 100 hand-painted pleated fans go into the construction of its flared skirt.

In order to realise such intricate forms of construction, the collection is made in France in collaboration with highly skilled couture artisans focused on upholding the highest craftsmanship and material standards. The show venue, the ‘Salle des Textiles’ at the Musée des Arts et Métiers, pays homage to the country’s rare artisanal expertise.

“I have been searching for the long-lasting beauty and respect for nature that you’ll find in the Persian garden, some of which date back to as early as 4,000 BC,” says Bahareh Ardakani, ArdAzAei’s founder and creative director.
 
“This is reflected in our endeavours to certify part of our collection to the Global Organic Textile Standard (GOTS), and why this collection is made in France with the country’s leading couture artisans. Every detail is precious, and we want to express the feeling of walking through a Persian garden in the midnight to the smallest of details.”
 
With ateliers in Paris and Stockholm, ArdAzAei is where Persian heritage, Swedish modernism and French savoir-faire collide.

As a luxury womenswear brand engaged in the search for the sublime, ArdAzAei eschews trend-based consumption to instead offer made-to-measure couture, and one prêt-à-porter collection of formalwear per year, released in drops according to the seasons on the digital flagship ArdAzAei.com
 
ArdAzAei focuses on working with textile suppliers that can reveal the details of the origins and processes behind its products, tracing each fabric right through the supply chain of raw materials, yarn spinners, weavers, print and dying techniques.

• Printing Expo Online is expanding again by doubling the size of Zone 2 with new exhibitors and feature zones making it one of the largest virtual trade shows in the world.

Visitors will be able to visit the new Zaikio underground catacombs that are accessible from several portals around the show. Click on a New York taxi, a London Phone Box or a funky Hot Dog Van and you will be transported into the Zaikio cavern environment where visitors will be able to watch application videos, arrange demos and sign up to this amazing new cloud-based platform.

Another addition to Zone 2 is the new Software Technology Centre (STC). This feature area will grow over time to show a wide range of software solutions that are available on the market.

Joining Printing Expo Online in the STC for the launch is EFI Fiery, who are showing their full portfolio of software solutions.

Design’N’Buy are also a new exhibitor in the STC with their all-In-One Web2Print software solution that helps users leverage technology, people and processes for the multi-fold growth of your printing business.

Also moving into the STC will be PrintIQ who offer the modern print shop a solution for businesses that need to be able to grow and scale as needed without slowing down or sacrificing quality.

Another new addition to the show is the introduction of the Global Print Trade Club. This initiate is free to all Print Service providers around the world and offers the opportunity to network on a global scale.

New to the exhibition is Kornit Digital with their multi storey showroom which will shortly be opening its doors where visitors will be able to view Direct to Garment and Direct to Fabric printing equipment, technical data, case studies, clothing designs and applications as well as visit the Kornit dedicated auditorium where live streaming content will be shown of Kornit Digital’s Fashion weeks as they happen throughout the year.

Another addition is the new application journey added to the Xeikon Innovation Centre at Printing Expo Online. Visitors will now be able to experience a virtual tour of a living room, kitchen, bathroom, and garage where Xeikon will show applications for commercial, label and Wall Deco products that can be produced on their digital print engines.

Printing Expo Online is open 24/7 365 days a year and has now welcomed over 60,000 visitors from all over the world and continues to grow not only its footprint and total visitor numbers, but also its relevance as an important resource tool for Print Service Providers from around the world that, for whatever reason, are unable to attend live events.

The automotive industry currently faces a complex set of market dynamics: rising material and transport costs, reduced budgets, changing consumer expectations, increasing challenges related to CSR, etc. In this context, improving efficiency across the whole value chain has become a strategic priority for vehicle and equipment manufacturers. Lectra supports its customers by designing and developing cutting-edge solutions that combine software, equipment, data and services to make its offer the gateway to Industry 4.0.
 
With Industry 4.0, a new range of possibilities is opening up to businesses. The concept and its technologies bring in new value creation and cost control models based on synchronized, flexible and fast processes.
 
The Automotive Cutting Room 4.0 offer is a set of solutions connected to one other: Vector, the fabric cutting equipment offering the best performance in the market; Empower, a new generation of digital services to leverage Vector's capabilities; Valia, the heart of the new offer, a software for preparing and scheduling production; and Algopex, an application for exploiting and capitalizing on all the data generated by the cutting room, so you can make the best decisions as quickly as possible.
 
Connecting up all the elements of the Automotive Cutting Room 4.0 offer delivers this unprecedented value and enables an unparalleled level of performance to be achieved. Nicolas Favreau, Lectra’s Automotive Marketing Strategy Director, explains: “When the whole cutting room process is digitalized, the data generated are centralized and accessible in real time, helping our customers to make the best decisions at every step of the production process. The benefits are huge. For example, the key performance indicators from the offer’s first users show productivity gains of around 5% and a reduction in material consumption of nearly 2%. That’s unheard of! These results, combined with the agility that the Automotive Cutting Room 4.0 brings and the complete process control, demonstrate the offer’s maximum relevance.”