The sporting goods group Adidas is becoming more optimistic for the current year after the first sales of its inventory of “Yeezy” products. In addition, the Adidas business itself developed slightly better than expected in the second quarter, the company announced on Monday in Herzogenaurach after the stock exchange closed. The expected loss and the drop in sales in 2023 are likely to be lower than assumed.
Adidas is now assuming a negative operating result of 450 million euros for the year, after an initial estimate of minus 700 million euros. Depreciation on the remaining “Yeezy” stock is seen at 400 million euros, 100 million euros less than before. In addition, there are costs for the strategic review of up to 200 million euros. Adjusted, the company continues to see the operating result at around the break-even level. Adidas did not rule out a further improvement in earnings through future “Yeezy” sales.
Adidas is more confident
At the end of May, the group announced that it would sell parts of the inventory of the “Yeezy” series products, which it had launched together with rapper Kanye West, even after the separation from the controversial musician. A “significant amount” is to be donated to organizations working against discrimination and hate, including racism and anti-Semitism.
Adidas also became a little more confident when it came to sales. The management around CEO Björn Gulden expects a smaller decline here. Currency-adjusted revenues are likely to fall in the mid-single-digit percentage range, after a high single-digit percentage range that had initially been envisaged.
In the second quarter, sales fell by a total of five percent to 5.3 billion euros, as Adidas further announced on the basis of preliminary figures. Adjusted for currency effects, sales were at the previous year’s level. The gross margin, which has received much attention from analysts, increased by 0.6 percentage points to 50.9 percent. The operating result fell from 392 million to 176 million euros.
Adidas continues to struggle with high inventories
The sporting goods industry is currently struggling with high inventories, some of which can only be reduced through discounts. In the past year, as a result of the supply chain problems, retailers had ordered a significant number of additional products in order to be able to meet the high demand at the time. Items are now sitting in storage while consumers are holding back on purchases. Adidas announced in May when presenting the figures for the first quarter that it would have inventories under control in the fourth quarter. (dpa)