Adidas raises profit guidance following “better than expected” performance in Q2

Adidas has raised its profit guidance to €1 billion in its preliminary results for the second quarter of 2024, in what the company has called a "better than expected" performance.

That’s up from previous guidance of €700 million, with the company’s revenues rising 9% to €5.8 billion – up from €5.3 billion in 2023.

The revenue growth "excludes Yeezy sales in both years", as currency-neutral revenues increased 16% during the quarter.

The company’s gross margin reached 50.8% in the second quarter, versus 50.9% in 2023, with the underlying gross margin improving strongly, "reflecting better sell-throughs, reduced discounting, lower sourcing costs and a more favourable category mix" – no doubt boosted by increased demand for its archive Samba and Gazelle styles.

The significantly smaller Yeezy business had a negative impact on the year-on-year comparison. The company’s operating profit increased to €346 million (versus €176 million in 2023), including a contribution of around €50 million from the sale of the remaining Yeezy inventory.

Adidas assumes that the sale of the remaining Yeezy inventory during the remainder of the year "to occur on average at cost". That would result in additional sales of around €150 million – with no further profit contribution during the remainder of the year.