Adidas's stock drops as sportswear seller investigates Chinese bribery scandal
By Louis Goss
Adidas shares dropped on Monday, following reports the sportswear seller has launched an investigation into claims made by a whistleblower that senior staff in its Chinese business are involved in a multimillion-euro bribery scandal.
The German company confirmed to MarketWatch it is investigating allegations made in a letter that several of its senior Chinese staff received major kickbacks from external service providers that work with Adidas, worth EUR250 million ($267 million) a year.
The letter, which was signed by "employees of Adidas China" and briefly appeared on Chinese social media platform Xiaohongshu, names several senior staff members in Adidas' Chinese business who allegedly received kickbacks including "millions in cash from suppliers, and physical items such as real estate," according to the Financial Times.
Shares in Adidas (XE:ADS), listed on the Frankfurt stock exchange, fell 4% on Monday having gained 18% in the year-to-date.
"On June 7, 2024, we received an anonymous letter indicating potential compliance violations in China. Adidas is currently intensively investigating this matter together with external legal counsel," an Adidas spokesperson told MarketWatch.
"Adidas takes allegations of possible compliance violations very seriously and is clearly committed to complying with legal and internal regulations and ethical standards in all markets where we operate," the company spokesperson added.
The sportswear company has not placed any of the individuals named in the whistleblower complaint on leave, the Financial Times reported, citing people familiar with the matter.
Adidas previously overhauled its leadership in China last year after sales in the country dropped due to lockdowns during COVID-19 and backlash against brands that refused to use cotton from Xinjiang over concerns about the use of forced labor in the Chinese province.
The overhaul saw the former CEO of Chinese lingerie company Cosmo Lady appointed Adrian Siu as head of Adidas' China business in 2022 in line with plans to boost sales in what had previously been Adidas most profitable and fastest-growing market.
Siu reportedly hired one of the senior managers named in the whistleblower report.
-Louis Goss
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
06-17-24 0812ET
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