Adidas (ADDYY) put its best foot forward, reporting its first-quarter results on Wednesday. The multinational sneaker and apparel maker posted a year-on-year profit increase in the quarter, and shares rose by 8 percent as it also raised its full-year guidance. Last year was difficult for the popular German brand, and it appears to be moving forward as it recoups earlier losses.
Adidas’s gross margin improved 6.4 percentage points to 51.2 percent. Its first-quarter operating profit was 336 million euros, an increase of 60 million euros compared to last year’s quarter. The company’s fiscal first-quarter revenue rose 4 percent to 5.5 billion euros. Adidas’s first-quarter results rose above analysts’ estimates.
Adidas also raised its outlook for the whole year. Earlier, Adidas projected that growth would be roughly at a near mid-single-digit rate. Its new outlook is a mid-to-high single-digit rate for the year 2024.
Adidas makes several popular brands of sneakers, such as Samba, Gazelle, and Campus. This year, it has partnered with the Olympics, Paralympics, EURO 24, and Copa events. Due to these partnerships, the German footwear and apparel maker expects a sales boost.
Adidas took huge losses after cutting ties with rapper Ye, formerly known as Kanye West, who made antisemitic remarks and dropped his brand. It has been selling its Yeezy (Ye’s brand) inventory, which has been a loss-making one. It plans to sell the remaining inventory by this year.
Adidas said it had sold 150 million euros worth of Yeezy products in the quarter and gained roughly 50 million euros in profit. The remaining Yeezy inventory is expected to be sold for about 200 million euros without profit.
CWEB analysts say that Adidas’s stock price could further increase as the company’s profitability rises and it finally gets rid of deadweight inventory. Global exposure at major events is also expected to boost sales and increase profits.
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