Half Year 2022 Adidas AG Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Grace Smalley - JPMorgan Chase & Co, Research Division - Analyst : My first question would just be on gross margin, please. I know clearly, it's too early to give specific guidance on gross margin in 2023. But in light of the number of headwinds you have pressure in gross margin this year, it'd be really helpful if you could help us understand directionally the headwinds and tailwinds you expect to face next year, and in particular, what levers you have to potentially offset currency pressure as you move into 2023. And then my second question would just be on the EMEA growth you saw this quarter. I think at the time of your Q1 results, you had said that you expected EMEA growth to accelerate in Q2 despite the headwinds that you knew at the time from Russia and supply chain. So just perhaps you could help us understand what changed in Europe in Q2 relative to your initial expectations a few months ago.

Question: Graham Ian Renwick - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Just firstly, just wondering how we should think about supply and demand into 2023 in Western markets. You're acknowledging that there could be some softer demand towards the end of the year and that there'll possibly be some additional discounting across the second half, which is all reflected in your new '22 guidance. But as we go into '23 with macro possibly weakening further, how flexible are you in terms of supply to be able to deliver on the opportunities next year in an upside scenario but also react quickly should demand continue to slow, and we possibly have too much stock in the channel that needs further discounting next year? And then the second question on China. It looks like China sales are running about 40% below 2019 levels. It feels like you're a bit more confident that the BCI issues have faded, and it's now largely just the lockdowns that's disrupting the business. Appreciate there's a lot of uncertainty on REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 04, 2022 / 1:00PM, ADSGn.DE - Half Year 2022 Adidas AG Earnings Call when zero COVID will end and when we can expect to see a more normalized environment in China. But when COVID-driven disruption does completely end, is there any reason why the China business can't quickly rebound to 2019 levels again, which I think is quite important to hit the midterm sales margin targets? Or do you think there's been a sort of structural rebasing of the China business perhaps as local brands have taken a bit more share, and therefore, we should expect a more progressive recovery in China once restrictions are gone?

Question: Jurgen Kolb - Kepler Cheuvreux, Research Division - Analyst : Two questions also from my side. In the current year and maybe also 2023, can you maybe share with us a number or a broad range of the sales share that you expect from newly issued products? Is that going to be higher this year than -- next year than in the past with all the products that you've shown to us during the Capital Market Day? That's the first one. And the second one is on China again. You indicated traffic was down. Maybe some additional comments in terms of conversion rates and average basket that you've seen in the Chinese market to maybe get some indication about the status of the Chinese consumer.