German sportswear brand Adidas on Tuesday cut its outlook for the financial year 2022 to grow "at a mid-to-high single-digit rate in 2022," compared with previous growth estimate of 11-13 percent, citing a "slower-than-expected recovery in its business in greater China" region as one of the major reasons.
"Given the continued widespread COVID-19 related restrictions, Adidas now expects revenues in greater China to decline at a double-digit rate during the remainder of the year," the company said, noting that there is also a potential slowdown in other markets.
Germany-based Adidas is not the only sportswear giant that has found its growth slowing in the Chinese market. Similar situations have been seen among other foreign sportswear brands and garment chains, including the US-based Nike.
Nike in June released its financial results for its fiscal 2022 fourth-quarter ending on May 31, with business revenue in China down 19 percent year-on-year.
COVID-related restrictions during the recent Omicron flare-ups in China did affect many brick-and-mortar stores' revenue, but it is not a "valid reason" to look for what caused the slowdown of foreign sportswear brands, Zhang Yi, CEO of iiMedia Research Institute, told the Global Times on Wednesday.
The real struggle of the foreign brands, which used to collect huge profits in the Chinese market, is their failure to promptly adjust their business strategies in the market to meet the demand of Chinese consumers, Zhang noted.
The rapid rise of domestic brands and their fast-growing revenue despite the COVID-19 resurgence is the best proof, Zhang said, stressing that the Chinese market's demand continues to be strong.
After the 50-percent-plus revenue surge in 2021, Chinese sportswear giant Li Ning saw its sales expand in 2022. The company's same-store sales grew by 20-30 percent year-on-year in the first quarter, and its e-commerce sales surged 30-40 percent in the period, according to its financial report.
Another domestic leading sportswear brand Anta saw the revenue of its main sub-brands grow 10-20 percent year-on-year in the first quarter of the year, while that of its other brands surged 40-45 percent in the same period.
After Adidas lowered its revenue estimates, Morgan Stanley said that Anta and Li Ning were expected to continue to post solid market share gains, according to some media reports.
Domestic brands' rapid expansion is natural given their advantages in brand value, better understanding of Chinese consumers and good quality as well as lower prices compared with foreign brands, Zhang said, noting that foreign brands need to step up efforts to better adapt to the rapidly evolving Chinese market.