Adidas CEO credits flourishing finances to Sambas and Gazelle sneakers

Sportswear giant Adidas says "over-investing" in products paid off, with footwear franchises Samba, Gazelle, Spezial, and Campus driving better-than-expected growth during the first quarter of 2024.

Currency-neutral revenues increased by 8% year-on-year. Not only was this due to brand momentum, but also the selling of parts of the remaining Yeezy inventory, which generated revenues of around £128 million (€150 million) during the first quarter.

Adidas revenues grew by 4% to £4.65 billion (€5.45 billion) and its net income amounted to £60 million (€71 million), compared to a loss of £20 million (€24 million) the year prior.

Footwear revenues increased by 13%, apparel sales were up by 2%, but accessories declined by 1%. Meanwhile, the company continued to fuel demand for its retro trainers - the Samba, Gazelle, Spezial, and Campus franchises.

The shoes recently made headlines in the UK after Prime Minister Rishi Sunak was photographed wearing a pair during an interview at 10 Downing Street. Gulden told journalists on Tuesday that the brand had experienced "no impact" on sales, despite social media users accusing him of "ruining the brand's street credibility".

In terms of channels, direct-to-consumer (DTC) grew by 20%, while Adidas store sales increased by 11% and e-commerce revenues grew by 34%. Wholesale increased by 2%.

Looking ahead, Adidas expects revenues to increase at a mid-to-high-single-digit rate in 2024. Updating its expectations, thanks to better-than-expected results, the company projects operating profit of around £597 million (€700 million) for the fiscal year.

Bjørn Gulden, CEO of Adidas, said: "I am very happy to see that the business in Q1 developed better than we had expected. Sales, gross margin, and operating profit were all better than initially planned.

"The growth is of course driven by our Lifestyle business right now, especially originals footwear, but we also see that the higher end of our Running, Football and Basketball product is doing well. The demand for our footwear franchises Samba, Gazelle, Spezial, and Camepus is still very strong and growing, but we also see new franchises like SL72 starting to become high in demand. We feel we have a very strong pipeline of products for the next quarters.

"The markets are still volatile and not easy, but we feel we are making progress everywhere... We will continue to ‘over-invest’ into the product, into the brand, into sales and marketing to ensure continued growth. We will not try to optimise short-term profit. We know we are not as good as we should be, but I feel that we are making the progress that we had hoped for."