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Adidas CEO Expects Operating Margin In China To Shrink, U.S. Margin To Grow

New adidas CEO Kasper Rørsted said that the company "expects its huge operating margin in China to shrink slightly in the long term, while its small U.S. margin grows markedly in the near term," according to Adam Jourdan of REUTERS. Rørsted, on his first visit to China since taking the helm in September, said that adidas' margin in Greater China of 35% last year would "stabilize and slightly decline." Meanwhile, North America, with a margin of 6.3% last year from 2.5% in '15, was playing "catch-up." Rørsted: "We expect a dramatic improvement in margins in the United States, but we expect over time also a slowdown in the margin development in China." The sports apparel market, "buoyed" by supportive government policies and health-conscious consumers, has been a "bright spot in China amid tougher conditions for firms from snack makers to cinema operators in the world's second-largest economy." Rørsted said that adidas would "invest heavily" in China, where he saw "huge long-term potential." The firm is on track to add 2,000 stores in China and hit 12,000 by '20 (REUTERS, 4/20).

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