Adidas Expects Big Rise In Cost Of Sourcing Products By 2020

German sportwear firm Adidas (ADSGn.DE) expects a significant rise in the cost of sourcing products by 2020 due to increasing labor and material costs, but should be able to compensate by lifting prices and cutting overheads, it said on Wednesday.

Ahead of an investor workshop, Adidas said in a statement it expected higher input costs and currency effects to push down its 2016 gross margin by 50-100 basis points, although it reiterated its operating margin should stay stable.

“We are optimizing our processes throughout the group and along the entire supply chain to drive further efficiency gains and we are continuing our structured hedging approach,” said Chief Financial Officer Robin Stalker.

REUTERS