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Adidas will take the hit of unanticipated product shortages not once, but twice. The first hit will be on revenue — the impact of the shortage will be around 200 million to 400 million Euro ($224 million to $448 million) in lost revenue, Rorsted said. The second hit will be on margin once the air freight costs take their toll.
Usage of air freight for shipping Adidas and Reebok goods was up slightly in 2018. Apparel, the category affected by the shortages, already had the highest use of air freight.
Rorsted said the impact on gross margin should be evident by the end of the year.
With an eye on margins, CFO Harm Ohlmeyer said inventory levels are "under strict control." The CFO is predicting a gross margin of 52% for 2019, which would mean a small increase from 2018's 51.8%.