Surplus instead of loss: Adidas surprisingly makes money

Surplus instead of loss
Adidas surprisingly makes money after all

January 31, 2024, 8:17 p.m

Listen to article

Adidas exceeded its own expectations by several hundred million euros – and still ended up in the operational profit zone. The sale of goods from the collaboration with the controversial rapper Ye – Kanye West – is proving to be profitable. The group expects sales to increase in the current year.

The sporting goods manufacturer Adidas made surprising money last year and maintained sales. The world’s second largest sporting goods group announced that its operating result was 268 million euros. However, that was 400 million euros less than the year before. CEO Björn Gulden had recently expected a loss of around 100 million euros.

Revenue remained flat after adjusting for currency effects, but Adidas had expected a decline. Calculated in euros, sales fell by five percent – more than one billion – to 21.4 billion euros, partly due to the devaluation of the Argentine peso. According to further information, the gross margin improved by 0.2 points to 47.5 percent.

The reason why the group exceeded expectations is, in addition to strong business at the end of the year, the decision to write off only a small portion of the remaining stocks of “Yeezy” shoes from the ended partnership with the controversial rapper Ye. Adidas hopes to be able to sell the rest this year at least to cover costs for 250 million euros. Two sales campaigns had already brought in sales of 750 million euros and an operating result of 300 million euros.

For the current year, Adidas forecast a currency-adjusted increase in sales of around five percent and an operating result of 500 million euros. Specifically, it is expected that revenue will initially be at the same level as the previous year, but will then improve from quarter to quarter, said Gulden. “We expect the underlying Adidas business (excluding Yeezy) to grow in the high single digits for the full year and at least 10 percent in the second half.”

This year is “the next building block to make Adidas a company with double-digit growth and an operating margin of ten percent.” The group could receive tailwind from two major sporting events this year – the European Football Championship in Germany and the Olympic Games in France.