Adidas expects a big jump in the cost of sourcing products over the next five years due to rising labor and material costs, but should be able to compensate by lifting prices, cutting its range and shifting production from China to countries like Indonesia.
The German sportswear firm said higher input costs and currency effects would push down its gross margin by 50-100 basis points in 2016, although it reiterated its operating margin should stay stable as it cuts operating expenses as a percentage of sales.
John McNamara, head of global sourcing, told an investor workshop he expected labor costs to keep rising by 11-15 percent a year, while the price of materials like cotton and nylon could go up 1-4 percent a year.
(Source: CNBC)