- Q2 sales beat forecasts
- Full year profit to hit €1 billion
- Samba and Gazelle shoes popular
Shares in Adidas’ (ADS:ETR) skipped 4.4% higher to €239 in Frankfurt after the world’s second-biggest sportswear manufacturer upgraded its full year guidance for the second time this year.
Hoping for a demand boost from the upcoming Olympic Games in Paris, the athletic apparel company hiked its 2024 forecast following a better-than-expected second-quarter performance which demonstrated that chief executive Bjorn Gulden’s turnaround strategy is bearing fruit.
DANCING TO A SAMBA BEAT
Bavaria-based Adidas now expects to deliver annual operating profit of around €1 billion (£839 million), up from previous guidance of ‘around €700 million’ and double the group’s expectation earlier this year.
Full-year sales are anticipated to be up high single digits versus earlier guidance for a mid-to-high single digit rise.
Adidas is capitalising on weakening sales at fierce rival Nike (NKE:NYSE) as well as bumper demand for its multi-coloured Samba and Gazelle sneaker models.
On 27 June, Nike shares slumped after the world’s biggest sportswear firm reported weaker-than-expected fourth-quarter sales and slashed its 2025 profit guidance.
Q2 OPERATING PROFIT DOUBLED
Adidas’ management is drawing confidence from a better-than-feared showing in the second quarter to May 2024.
Operating profit almost doubled to €346 million including a contribution of roughly €50 million from the sale of part of Adidas’ remaining Yeezy inventory.
Sales increased by 9% to $5.82 billion, comfortably ahead of the €5.58 billion analysts were predicting.
Adidas, whose three-stripe motif is among the most identifiable in the world, said its performance was aided by ‘reduced discounting, lower sourcing costs and a more favourable category mix’, although it conceded currency fluctuations would ‘weigh significantly’ on profitability this year.
Life has not been easy for Nike and Adidas of late: both companies faced supply-chain issues and rising costs coming out of the pandemic, while cost-of-living pressures have constrained consumers’ will and ability to spend big money on a pair of trainers.
Smaller and more agile brands like Hoka and On Running, not to mention heritage brands like New Balance, have also been nibbling away at their market share.
