adidas announced that its Supervisory Board extended the appointment of Kasper Rorsted as the executive chief for another five years. During the six month period, the company incurred a net loss from continuing operations of € 286 million (2019: income of € 1.093 billion). The annual effective tax rate for 2020 may differ from the effective tax rate for the first half of 2020 due to a range of factors including the full year pre-tax earnings of each consolidated entity, the ability to deduct certain expenses, changes to corporate income tax rates and judgements regarding the ability to recognize deferred tax assets. Gross margin in Russia/CIS was down 1.3 percentage points to 60.2%, as an unfavorable channel and pricing mix as well as negative currency developments more than offset lower sourcing costs. Operating profit in Europe decreased 57% to € 330 million. In the first six months of 2020, adidas recorded an operating loss of € 268 million (2019: profit of € 1.518 billion), resulting in a negative operating margin of 3.2% (2019: positive 13.3%). Outside the share buyback program initiated in March 2018, the company purchased adidas AG shares in connection with this employee stock purchase plan in the first six months of the 2020 financial year. Exceptional currency-neutral growth of 67% in e-commerce - the only channel that remained fully operational in most parts of the world throughout the first half of the year - could only partially offset the material revenue decline in the physical channels.
In addition, lower consumer confidence due to the drop in economic activity as well as the cancellation and postponement of major amateur and professional sports events posed headwinds for the industry.
2019 Annual Report. Operating working capital increased 6% to € 4.506 billion at the end of June 2020 (2019: € 4.248 billion). Accounting and valuation policies applied for reporting segmental information are the same as those used for adidas. This is still in draft mode.
Operating expenses were down 19% to € 96 million, mainly reflecting a decrease in operating overhead costs. SEE NOTE 06. The amendment to IFRS 16 'COVID-19-related Rent Concessions' published by the IASB on May 28, 2020 and effective for annual periods beginning on or after June 1, 2020, and subject to the pending endorsement by the European Union, will not have any impact for adidas, as adidas will not apply the exemption option regarding the treatment of rent concessions relating to the coronavirus pandemic. While store traffic remains below prior year, levels, targeted efforts to revitalize retail have led to sequential improvements since stores reopened.
Reebok brand revenues decreased 27% on a currency-neutral basis due to double-digit declines in both Sport and Classics.
In most segments, a more favorable channel mix due to the exceptional e-commerce growth had a positive effect on the gross margin development.
In Asia-Pacific, the market that was impacted the earliest by broad-based store closures, sales decreased 31%. Income from government grants is reported as a deduction from the related expenses. Welcome to adidas Investor Relations.
GLOBAL ECONOMY SLUMPS IN FIRST HALF OF 2020 DUE TO CORONAVIRUS OUTBREAK1.
To add bookmarks, please click the star on the bottom right corner of content tiles or at the bottom of every content page. adidas brand revenues were down 32% on a currency-neutral basis, with double-digit declines in both Sport Inspired and Sport Performance. The operating segments North America adidas and North America Reebok have been aggregated to North America. As a result of all these developments, cash and cash equivalents decreased € 436 million from € 2.455 billion at the end of June 2019 to € 2.018 billion at the end of June 2020.
This was based on updated financial plans and estimates. The company may, also at its discretion, terminate the agreement prematurely.