Adidas shares fall after investigation into corruption allegations in China

(Reuters) – Adidas (ADDYY) shares fell 4% on Monday after the German sportswear brand said it was investigating allegations of corruption in China following the receipt of an anonymous letter.

“Adidas takes allegations of possible compliance violations very seriously and is clearly committed to complying with legal and internal regulations as well as ethical standards in all markets in which we operate,” it said in a statement.

Adidas shares fell 4 percent to 216 euros by 10:30 GMT. The company said it could not provide further information until the investigation was completed.

The allegations “underscore the challenges many companies face in consistently monitoring and controlling their digital activities in the Chinese market,” says Jacques Roizen, managing director of China consultancy Digital Luxury Group in Shanghai.

Over the past 18 months, Adidas has been working to boost its sales in China after losing significant market share to competitors even before the COVID-19 pandemic.

“This could also jeopardize the goal of finally regaining a foothold in China after the massive slumps of the past four years,” says Jürgen Molnar from the brokerage firm RoboMarkets.

(Reporting by Casey Hall in Shanghai and Zuzanna Szymanska in Berlin, writing by Helen Reid in London; editing by Alexander Smith)