Home NEWS Adidas surpasses operating profit expectations for 2023

Adidas surpasses operating profit expectations for 2023


“Despite falling short of desired targets, the conclusion of 2023 exceeded initial expectations,” summarized adidas CEO Bjørn Gulden. “Despite notable losses in Yeezy revenue and a cautious approach to sales, we maintained steady revenues, achieving an operating profit of €268 million. Our disciplined market approach and inventory management led to a reduction of nearly €1.5 billion in stock levels, with healthy inventory balances across regions except for the US.”

In terms of full-year results, adidas’ sales remained flat in currency-neutral terms, outperforming earlier projections of a high-single-digit decline. This performance was attributed to strengthened business fundamentals and the clearance of remaining Yeezy inventory. However, in euro terms, revenue decreased by 5% to €21.4 billion, impacted by reduced wholesale sales and the discontinuation of the Yeezy line, resulting in a negative impact of approximately €500 million.

Regionally, North America experienced a 16% currency-neutral revenue decline due to the Yeezy impact and conservative sales strategies, while EMEA saw flat revenue driven by direct-to-consumer growth offsetting wholesale declines. Greater China and Asia Pacific regions achieved 8% and 7% currency-neutral revenue growth, respectively, supported by own-channel expansion. Latin America reported a 22% sales increase despite currency devaluation.

Adidas’ gross margin improved slightly to 47.5% due to a favorable business mix and reduced freight costs, countered by negative currency effects and increased product costs. Despite an initial forecast of a €700 million operating loss, the company achieved an operating profit of €268 million, with a 1.3% margin. Net loss from continuing operations totaled €58 million, attributed to high tax rates, resulting in negative earnings per share of €0.67.

Looking ahead to fiscal 2024, adidas anticipates mid-single-digit currency-neutral sales growth, factoring in the sale of remaining Yeezy inventory. Sales are expected to accelerate throughout the year, with a full-year operating profit target of around €500 million.