Narrow-Moat Adidas Faces More Adversity in 2023 but New CEO and Brand Strength Provide Hope

In an extraordinarily tumultuous period for Adidas, new CEO Bjorn Gulden and holdover CFO Harm Ohlmeyer (both of whom are under contract until 2028) presented the final 2022 financial results, discussed the challenges in 2023, and highlighted future opportunities. The 2022 results and outlook for 2023 were consistent with its preannouncement (see our Feb. 9 note) and our recently lowered estimates. Thus, we do not expect material changes in our EUR 162/$86 fair value estimates and believe Adidas’ shares are attractive for investors willing to ride out more strife in 2023. Our confidence stems from the recovery in international athletics and the power of Adidas’ brand, the source of our narrow-moat rating on the firm.