PEST Factor: Economic
The unemployment rate in the Eurozone rose to 11.7% in October 2012 and much worse in some countries such as Spain (1 in 4 people are jobless). This is due to the economic debt crisis that has been ongoing for the past three years. Rising unemployment is depressing consumer confidence, meaning that people are spending less on non-essential goods including sports shoes and sportswear. According to the Adidas website, the company generates almost 30% of sales from Western Europe and another 12% from the emerging markets in Europe. Moreover, only 5% of the Western Europe markets are growing in comparison to places like Greater China with 30% or North American with 15% growth on a currency-neutral basis. The outlook in 2013 is very unfavourable as governments continue to cut spending, further depressing the economy. Any fall in consumer spending will significantly impact Adidas’ financial performance.
Sources:
http://www.krdo.com/news/economy-tracker/Europe-s-jobless-lines-keep-growing/-/477266/17604664/-/h44c0sz/-/index.html
http://www.adidas-group.com/en/pressroom/archive/2012/08Nov2012.aspx
The unemployment rate in the Eurozone rose to 11.7% in October 2012 and much worse in some countries such as Spain (1 in 4 people are jobless). This is due to the economic debt crisis that has been ongoing for the past three years. Rising unemployment is depressing consumer confidence, meaning that people are spending less on non-essential goods including sports shoes and sportswear. According to the Adidas website, the company generates almost 30% of sales from Western Europe and another 12% from the emerging markets in Europe. Moreover, only 5% of the Western Europe markets are growing in comparison to places like Greater China with 30% or North American with 15% growth on a currency-neutral basis. The outlook in 2013 is very unfavourable as governments continue to cut spending, further depressing the economy. Any fall in consumer spending will significantly impact Adidas’ financial performance.
Sources:
http://www.krdo.com/news/economy-tracker/Europe-s-jobless-lines-keep-growing/-/477266/17604664/-/h44c0sz/-/index.html
http://www.adidas-group.com/en/pressroom/archive/2012/08Nov2012.aspx