Concise insights on global finance in the Covid-19 era

pexels photo 186461

Endurance sport. Adidas’s turnaround is a marathon, not a sprint. On Wednesday the German sportswear maker committed to average annual revenue growth of 8% to 10% up to 2025, and an operating margin of between 12% and 14% by then. A plan to sell Reebok will help: analysts at TAG estimate an operating margin of 12% in 2019 without it, rather than the reported 11%.

Still, those are Olympian goals for a company which struggled to take advantage of a boom in home exercise equipment and stretchy clothes during the pandemic. Last year sales fell 14% on a constant currency basis, to 20 billion euros. Puma saw only a 1.4% decline. This heaps pressure on Chief Executive Kasper Rorsted: since his appointment in 2016, Adidas has returned 95% to shareholders, compared to Puma’s 280% or 173% for Nike. Rorsted now hopes to boost the group’s brands, double its online sales, and increase profitability all at once. That will require plenty of stamina.

Triumphant return. China Telecom looks set to get a strong reception in Shanghai. On Tuesday the state-owned wireless carrier announced plans to sell up to 12 billion shares, equivalent to 13% of the enlarged capital, through a secondary listing on the city’s bourse – two months after being delisted in New York. Investors cheered the decision, sending its Hong Kong-listed shares up as much as 9.8% on Wednesday.

That may look understated once the telco giant goes live in Shanghai – the first of the Chinese companies blacklisted in the United States to seek to do so. The Beijing government can encourage other state entities to buy stock. And China Telecom currently trades at just 8 times forecast earnings for the next 12 months, Eikon data show, compared to 22 times for its closest competitor China Unicom’s Shanghai-listed entity. Closing even part of that gap would handily compensate for its dropped U.S. connection.

Disappears Morgan. Britain’s broadcasters can now put a price on U.S.-style culture wars. Shares in ad-funded ITV fell 4% on Wednesday morning, lopping 230 million pounds off its market value, after it parted company with breakfast-television pundit Piers Morgan. The presenter of ITV’s “Good Morning Britain” attracted 41,000 complaints for accusing Meghan Markle of lying about suicidal depression in her interview with Oprah Winfrey.

The share decline implies an annual hit of perhaps 29 million pounds of EBITDA, based on ITV’s 9 times enterprise value trading multiple. Given its 20% EBITDA margin, that’s equivalent to 129 million pounds of revenue, or 8% of the company’s forecast 2021 advertising sales. That may overstate Morgan’s true worth, but ITV can’t take his departure lightly: on Monday, “Good Morning Britain” enjoyed a record 32% market share. And with younger Britons turning away from television, its older, wealthier viewers are increasingly valuable. Morgan has a handy bargaining chip in negotiations with potential future employers.

Speed delivery. Just Eat boss Jitse Groen’s turnaround is getting further and further away. The Anglo-Dutch meal delivery company on Wednesday said the lockdown helped revenue grow by 54% last year to 2.4 billion euros. Yet the 12 billion euro group is still far from profitable. The cost of investing in a fleet of drivers in the UK contributed to a net loss of 151 million euros, up from 115 million euros a year earlier.

The investment is starting to pay off. Orders in the UK were up 88% in the first two months of 2021. But Groen’s job will get harder from now on. As restaurants reopen, people will want fewer deliveries. And rival Deliveroo will soon be listed, boosting its access to capital. Groen also needs to focus on an even more competitive U.S. market, where merger partner Grubhub is losing market share. A likely imminent sale of the 33% stake in Brazilian startup iFood, worth at least 2.3 billion euros, will at least give Just Eat more firepower.