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Adidas Q2 sales fall in China as consumers boycott international brands

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LONDON — Adidas has increased its outlook for the year, despite a drop in sales in China where some consumers have boycotted the sportwear brand for its stance against alleged human rights abuses.

In its second-quarter earnings report Thursday, Adidas said revenue had picked up everywhere except Greater China, particularly in Europe and the U.S, driving a 55% hike in second-quarter sales from the previous year.

“We are seeing North America, Latin America and Europe having a very, very strong growth and we are seeing uncertainty in China, but I am very, very convinced that China will be very, very successful also for this year,” Kasper Rorsted, CEO of Adidas, told CNBC’s Squawk Box Europe.

The German sportswear giant’s net income came in at 397 million euros ($470 million) for the second quarter, in sharp contrast to the net loss of 295 million euros reported this time last year, at the heights of the coronavirus pandemic.

Online revenues fell 14% over the second quarter, as more consumers were able to visit stores. Adidas saw a sharp hike in online sales over the same period in 2020 when many markets were in lockdown.

Rorsted said online sales were undergoing some “normalization” from the abnormal levels seen last year, but he still expects “strong growth” in e-commerce going forward.

Adidas increased its outlook, saying it now expects sales growth of up to 20% year-on-year in 2021, supported by upcoming product releases and the fact that more people will be able to attend live sports events.

China boycott

The company’s China sales are being closely monitored by analysts and investors.

Adidas said Thursday that second-quarter sales fell by more than 16% in Greater China.

Pedestrians walk by a large Adidas logo inside the German multinational sportswear shop.

Miguel Candela | SOPA Images | LightRocket via Getty Images

“Because of geopolitical tensions, we did see an impact particularly in our online business in the second quarter in China, and we think that will over time normalize,” Rorsted said.

It comes after some mainland Chinese consumers began boycotting international brands that have taken a stand against the treatment of one of China’s ethnic minorities in the Xinjiang region, where many cotton plantations are found.

The ethnic Uyghurs, who live mostly in China’s west, have been identified by the United Nations, United StatesUnited Kingdom and others as a repressed group.

Earlier this year, Canada, the U.K, and the U.S. issued a joint statement expressing “deep and ongoing concern” about forced labor, mass detention in internment camps and other serious abuses committed against the Uyghurs in Xinjiang. The European Union in March imposed sanctions on Chinese officials it says are responsible for abuses against Uyghurs.

China’s foreign ministry has characterized such claims as “malicious lies” designed to “smear China” and “frustrate China’s development.”

Adidas has previously said that it has a “zero tolerance approach to slavery and human trafficking.”

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House passes funding, debt ceiling bill

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Speaker of the House Nancy Pelosi (D-CA) leaves after holding her weekly press conference at the U.S. Capitol on August 25, 2021 in Washington, DC.

Kevin Dietsch | Getty Images

The House passed a bill Tuesday that would both prevent a government shutdown and suspend the debt limit in a step toward preventing possible economic calamity.

The chamber approved the plan in a 220-211 vote. All Democrats voted for it and all Republicans opposed it.

As the bill heads to the Senate, Republicans are threatening to block it, which could leave Democrats scrambling to find another way to avoid a federal funding lapse — or even a first-ever default on U.S. debt. Worries about a looming default and the economic damage it would cause contributed to a U.S. stock market drubbing on Monday.

Congress has to pass a funding plan by Sept. 30 to prevent a shutdown. Separately, the U.S. will exhaust all of its options to keep paying its bills sometime in October, Treasury Secretary Janet Yellen has told congressional leaders.

The House-passed plan would keep the government running through Dec. 3. It would also suspend the debt ceiling into Dec. 2022.

The bill would put $28.6 billion toward natural disaster relief and $6.3 billion toward resettlement of Afghan refugees.

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Senate Minority Leader Mitch McConnell, R-Ky., has said Republicans will vote for a standalone funding bill but not legislation with a debt limit suspension attached.

While Democrats have pointed out that the GOP signed off on huge emergency coronavirus relief bills since the last debt ceiling suspension, Republicans have said their counterparts should move to prevent default on their own as they prepare to pass a mammoth spending bill without the GOP.

Ahead of the House vote, Senate Majority Leader Chuck Schumer, D-N.Y., warned Republicans that failure to raise the debt ceiling could wreak havoc on the economy and critical government benefits such as Social Security.

“This is playing with fire. Playing games with the debt ceiling is playing with fire and putting it on the back of the American people,” he said Tuesday.

It is unclear how Democrats would proceed if the legislation fails in the Senate.

They could attach a debt ceiling suspension to their $3.5 trillion budget reconciliation bill. Doing so would add more steps to an already chaotic and time-consuming process.

The proposal, the centerpiece of President Joe Biden’s domestic agenda, would make massive investments in the social safety net and climate policy. Republicans want Democrats to tie the debt limit suspension to the sprawling bill, which Democrats want to pay for through tax increases on corporations and the wealthy.

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Amazon awards cars, $100,000 cash bonuses to vaccinated workers

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Amazon gave away cars and $100,000 cash bonuses to a handful of vaccinated warehouse workers as part of its running sweepstakes to encourage employees to get inoculated.

Four warehouse workers and a Whole Foods employee were awarded cars worth as much as $40,000 after they provided proof of Covid-19 vaccination, the company announced Monday in an Instagram post on its “Amazon Vest Life” account, which distributes news and lifestyle content for front-line employees.

Last week, three warehouse and Whole Foods employees were given $100,000 cash awards for getting vaccinated, Amazon said in a separate Instagram post.

Amazon in August launched a sweepstakes to reward employees who’d gotten the Covid-19 vaccine and encourage holdouts to get their shots. Called “Max Your Vax,” it offers employees the chance to win cars, a week of paid time off complete with a $12,000 vacation package, as well as cash awards worth $100,000 and $500,000.

A total of 18 prizes worth nearly $2 million will be awarded this month through Oct. 21, according to Amazon. To participate, employees provide proof that they’re fully vaccinated via an internal website.

Amazon said it believes getting vaccinated is critical for employees to protect themselves and communities. Amazon has held more than 1,500 on-site vaccination events for employees and their families, the company added.

Amazon hasn’t required its front-line workers to get vaccinated, but these sweepstakes serve as a nudge to encourage vaccination. Amazon has also offered bonuses of up to $100 to employees and new hires who show proof of vaccination.

Amazon is eager for its hundreds of thousands of front-line workers to get vaccinated as the Covid delta variant spreads rapidly across the globe. The company has resumed some coronavirus safety measures that were previously in place, including mask mandates in U.S. warehouses. Additionally, Amazon is working to restart its coronavirus testing program in its warehouses after winding down its on-site testing facilities, the Seattle Times reported.



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Mainland China markets return to trade from holiday

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SINGAPORE — Shares in Asia-Pacific slipped in Wednesday morning trade. Markets in mainland China are set to return to trade following holidays on Monday and Tuesday.

The Nikkei 225 in Japan slipped 0.3% in early trade while the Topix index shed 0.36%.

In Australia, the S&P/ASX 200 dipped fractionally.

MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.13% lower.

Mainland China markets reopen on Wednesday following holidays on Monday and Tuesday. Investors will watch for reaction to the ongoing fallout surrounding embattled developer China Evergrande Group.

Markets in Hong Kong and South Korea are closed on Wednesday for holidays.

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Overnight stateside, the Dow Jones Industrial Average dipped 50.63 points to 33,919,84 while the S&P 500 declined around 0.1% to 4,354.19. The Nasdaq Composite outperformed, rising 0.22% to 14,746.40.

Investors look ahead to the policy statement from the U.S. Federal Reserve, expected Wednesday stateside, for signals on when the central bank could taper its bond purchase program.

Currencies and oil

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 93.228 after sliding from levels above 93.3 earlier in the week.

The Japanese yen traded at 109.14 per dollar, having strengthened form around 110 against the greenback earlier this week. The Australian dollar changed hands at $0.7227 following its decline yesterday from above $0.725.

Oil prices were higher in the morning of Asia trading hours, with international benchmark Brent crude futures up 0.24% to $74.54 per barrel. U.S. crude futures gained 0.27% to $70.68 per barrel.

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