Athletic apparel company Adidas has launched an investigation into allegations of "compliance violations" in China after receiving an anonymous letter earlier this month accusing local executives of embezzling "millions of euros," according to news reports.
Adidas confirmed it had received an anonymous June 7 letter indicating potential "compliance violations" in China, the Wall Street Journal and Bloomberg reported.
The shoe and sportwear maker said it was investigating the matter together with external legal counsel, the news outlets reported.
Chinese state media outlet Jiemian last week reported that an anonymous group of whistleblowers, who called themselves employees of Adidas China, had sent the letter containing the allegations to the company's German headquarters.
The letter, which was published by Jiemian but also widely circulated on social media, accused senior executives and several staff members of embezzlement and receiving bribes from suppliers in the form of cash and real estate, and of taking kickbacks from celebrities and advertising agencies.
One senior executive was also accused of workplace bullying, such as swearing at subordinates, and of nepotism.
The whistleblowers said that if Adidas did not address the issues brought up in the letter, the matter would be disclosed to external media and "legal departments."
Greater China, which encompasses mainland China, Hong Kong and Taiwan, makes up 15% of Adidas' sales, according to its 2023 annual report.
The German brand is the second-largest sportswear brand in China, behind Nike.
Adidas' Greater China sales grew 8% in 2023, after declines between 2019 and 2022 due to COVID-19 pandemic lockdowns and a backlash in China against Western brands which refuse to use Xinjiang cotton. Activists say cotton produced in Xinjiang often involves forced labor.
Adidas regularly engages popular Chinese celebrities to be its brand ambassadors, including singer and actor Jackson Yee, popular Chinese rapper Gali and Dilraba, a popular Chinese singer of Uyghur descent.
Nike’s quarterly sales and profits slump as it faces shoppers’ sluggish demand for its products
Nike sales and profits slumped in its fiscal first quarter as the sportswear giant wrestles with shoppers' sluggish demand for new sneaker models and other products.
The lackluster results Tuesday came after Nike announced last month that its CEO, John Donahoe, is stepping down on Oct. 13. Company veteran Elliott Hill is coming out of retirement to head up the company.
"A comeback at this scale takes time, but we see early wins — from momentum in key sports to accelerating our pace of newness and innovation," said Matthew Friend, executive vice president and Nike's chief financial officer, in statement. "Our teams are energized as Elliott Hill returns to lead Nike's next stage of growth."
Friend told analysts Tuesday that, given its CEO transition and with three quarters left in the fiscal year, Nike has withdrawn its full-year financial-performance guidance and intends to provide a quarterly outlook for the balance of the fiscal year. It also postponed its investor meeting that had been scheduled for Nov. 19.
Nike has been known for its innovation but in recent years, analysts have said that it has lost its focus on coming up with cool products.
Neil Saunders, managing director at GlobalData Retail, said that some of the sales decline was due to a weaker consumer economy that has shoppers buying fewer sneakers and not splurging on clothing as they once did.
"Nike has done itself no favors with a lack of focus and oomph in a market where far more effort and exertion is needed to hold onto sales," he said. "There is a general sense that Nike has lost its edge and that the power of its innovation and the quality of its storytelling have both been faded."
Saunders noted that at the same time, smaller rival brands... Read More