Adidas Surges 8% following a Boost in First-quarter Profits and an Improved Outlook

Citation: Image used for information purpose only. Picture Credit:

Adidas shares surged by 8.2% on Wednesday following the company’s unexpected upward revision of its full-year guidance and a year-on-year profit increase reported in the first quarter. The German sportswear giant now anticipates currency-neutral revenues to grow at a mid-to high-single-digit rate for the full year 2024, up from its previous mid-single-digit growth projection. Operating profit is also forecasted to reach approximately 700 million euros ($745 million) for the year, a significant increase from the earlier estimate of around 500 million euros. Adidas has been divesting its Yeezy inventory following the end of its collaboration with rapper Kanye West, with expectations of generating an additional sales boost of around 200 million euros from the remaining inventory throughout the year.

According to preliminary data, Adidas reported an operating profit of 336 million euros for the first quarter, a significant increase from 60 million euros in the same period last year. The company cautioned that unfavourable currency effects would significantly impact profitability for the year, affecting both reported revenues and gross margin development. After experiencing revenue loss from Yeezy sales in 2023, Adidas anticipates growth in the first quarter, with expectations of further strengthening in the second half of the year, as stated by CEO Bjørn Gulden. Analysts from UBS note that the underlying sales growth from Yeezy products underscores the rapidly accelerating momentum of the Adidas brand. They view Adidas as one of the best-performing companies in terms of earnings momentum in the market.

Adidas is leveraging partnerships with major sporting events like the Olympics, Paralympics, EURO 24, and Copa to boost its performance. Analyst Mamta Valechha from Quilter Cheviot highlighted the potential of the company’s Terrace footwear brand to drive momentum across other franchises. With a busy summer sporting calendar ahead, Adidas is focusing on performance shoes such as running and basketball. As inventories become cleaner, Valechha anticipates increased demand from retailers for Adidas products, reflecting the brand’s growing popularity.

For More Details: