(MENAFN- AFP)
Adidas shares slid Monday as the German sportswear giant said it was investigating alleged bribery in China after senior employees were reportedly accused of embezzling huge sums.
It is another blow to the group, which has been betting on healthy business in key market China this year as it seeks to recover from the tumultuous end of its lucrative tie-up with rapper Kanye West.
The bribery claims emerged at the weekend when the financial Times reported that an anonymous letter, allegedly written by "employees of Adidas China", named several Chinese staff members.
In a statement Adidas said that in June it "received an anonymous letter indicating potential compliance violations in China".
The group takes such allegations "very seriously and is clearly committed to complying with legal and internal regulations and ethical standards in all markets where we operate," it said.
"Adidas is currently intensively investigating this matter together with external legal counsel."
Shares in the outfitter slid more than four percent on Frankfurt's blue-chip DAX index before winning back some ground to end the day 2.6 percent lower.
According to the Financial Times, those accused included one of the company's executives involved with Adidas's marketing budget in China, which it said stood at 250 million euros ($268 million) a year.
Another Adidas China manager is said to have received "millions in cash from suppliers, and physical items such as real estate", according to the paper.
The letter, which was posted this month on the Chinese social media platform Xiaohongshu, was no longer visible on the website at the weekend, but a purported copy, the authenticity of which AFP was unable to verify, was posted on several accounts.
Company insiders quoted by the paper said the letter did not provide evidence for the allegations but appeared well-informed about confidential internal issues.
- Kanye woes -
China was traditionally a hugely important market for Adidas but its business in the world's second-biggest economy was hit hard during long-running coronavirus lockdowns.
The group's Greater China sales had however been recovering strongly, growing eight percent last year, and it was forecasting double-digit growth in 2024.
But the corruption allegations "could jeopardise the goal of finally regaining a foothold in (China) after the massive slumps of the past four years," warned Juergen Molnar, an analyst at RoboMarkets.
The rebound in China had been a much-needed boost after Adidas in 2022 ended its lucrative tie-up with West following an outcry over his anti-Semitic comments.
Adidas had developed the popular line of Yeezy trainers with West, and the end of the partnership contributed to the group reporting its first annual loss in over 30 years in 2023.
However in recent months the company had been returning to a better financial footing.
MENAFN17062024000143011026ID1108341981
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.