News

Adidas logistics to limit growth amidst shift to D2C ecommerce

Adidas

Adidas has predicted that its supply chain will hold its growth back over the next six months as it continues to adapt to selling directly to consumers.

The apparel brand said sales had increased 8% in 2018 in currency-neutral terms, while operating profit grew 14% to €2.368 billion. Ecommerce was a particularly strong performer, with revenues growing 36% to over €2 billion.

The focus on ecommerce has required Adidas to invest in its own logistics capabilities. 12% of its overall capital expenditure in 2018 went into logistics, or around €95 million. The brand also expanded its logistics workforce by 5% to 6175.

The company claims to be “omnipresent” in the customer journey, offering the chance to view in-store inventory, click and collect, ship from store and returns to store. At the same time, Adidas is cutting its store estate.

However, Adidas told investors in a statement that supply chain shortages would prevent it from fulfilling orders for mid-priced apparel in the first half of 2019. This is expected to reduce growth in 2019 by up to 2 percentage points.

Adidas CEO Kasper Rorsted said: “We have made great strides toward and are confirming our 2020 financial ambition. Our strategic growth drivers – adidas North America, China and ecommerce – once again delivered double-digit growth. In 2019, we will continue to drive the execution of ‘Creating the New’ to deliver another year of quality top-line growth and over-proportionate bottom-line improvements.”