Two employees in sportswear giant Adidas’ (OTC:ADDYY) (GB:0OLD) (DE:ADS) China unit have left the company amid its corruption probe. The exits come after Adidas received a whistleblower complaint accusing its senior China staff of taking bribes amounting to millions of euros.
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Whistleblower Complaint at Adidas
An unsigned letter from individuals claiming to be employees of Adidas China alleged that an Adidas senior manager in China, responsible for overseeing the company’s €250 million annual marketing budget, had embezzled millions of euros and accepted kickbacks from external advertising and celebrity agencies.
Adidas’ Corruption Probe
In response, Adidas initiated an investigation and brought in independent external advisers for the probe. While the two employees in question have left the company, the probe remains ongoing. Importantly, additional dominos could fall in the coming periods, as the whistleblower complaint implicated several more members of Adidas China’s executive team in wrongdoing.
Adidas, the second-largest sports retailer in the world, counts China as one of its biggest markets. Consequently, its performance in the region can significantly impact the company’s overall performance. The corruption revelations have also weighed on Adidas’ share price this month. The stock has corrected from roughly $127 at the beginning of June to the current $118 level.
What Is the Price Target for Adidas Stock?
Wall Street, though, remains optimistic about Adidas’ prospects. Overall, the Street has a Moderate Buy consensus rating on Adidas, alongside an average ADDYY price target of $163.23. This points to a 37.3% potential upside in the stock.
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