Adidas raises profit guidance following “improved sentiment” for brand
Adidas’ brand momentum has driven double-digit top-line growth in the second quarter of 2024, with operating profit of €346 million compared to €176 million last year.
Currency neutral sales were up 11%, reflecting the "strong" momentum of the underlying Adidas business. The sale of parts of the remaining Yeezy inventory generated revenues of around €200 million in the quarter, which is significantly below the €400 million of Yeezy sales generated in the prior year.
Footwear revenues increased 17% during the quarter, with a "strong" product offering in Originals and Football translating into double-digit growth in those categories. In addition, increases in Running, Training, Performance Basketball, and Sportswear also contributed to the top-line increase in footwear.
Apparel sales were up 6%, driven by double-digit growth in Football. Jersey sales related to the UEFA Euro 2024 and the CONMEBOL Copa América, with the Adidas teams Spain and Argentina winning the tournaments, drove the increase.
The brand continued to drive newness across its popular Samba, Gazelle, Spezial, and Campus products. In addition, Adidas also experienced increasing demand in Retro Running.
From a channel perspective, wholesale grew 17% and direct-to-consumer (DTC) was up 4% versus the prior year.
Excluding Yeezy, the company’s DTC business grew 21%. Within DTC, growth in Adidas’ own retail stores further accelerated. However, e‑commerce revenues declined 6% because of the significantly smaller Yeezy business.
Adidas CEO, Bjørn Gulden said: "Q2 was another quarter confirming that we are improving and on the way of again becoming a good and healthy company. The consumers are reacting positively to both our marketing and to our product launches.
"We see improved sentiment for the Adidas brand globally and we continue to see improved sell-out numbers, both for lifestyle and performance products. New in the quarter was to see a positive development also for apparel.
"Both the consumers and our retail partners continue to show a strong and increased interest in our brand and our products. This was clearly reflected in the 16% growth for the underlying Adidas business in the quarter and in growth across all channels and all markets.
"Euro 2024 and Copa América were great football events with great atmospheres and with huge interest from the fans. I was very happy to see how Adidas showed up as a brand and of course extremely proud to see Argentina winning the Copa and Spain winning the Euro.
"It was also great to see how these big sport events bring athletes, fans and people together in a very positive way. We now look forward to see this continue with great Olympics in Paris. The start has been sensational.
"Given the improved business in Q2 we continue to raise our expectations and are now guiding for a full-year revenue increase in the high single digits and an operating profit of around €1 billion.
"The improved brand momentum with our consumer happened faster than we had expected. But that does not mean we do not have a lot of work to do. I am convinced we can bring Adidas back to be a very strong and healthy company.
"To achieve this we will work hard to continue to grow double digits and use this growth to get leverage on our cost base to improve our profitability. Our mid-term EBIT margin target of 10% is achievable despite external challenges."
