Adidas Earnings: Results Match Preliminary Report as Outlook Clouded by Yeezy; Shares Fairly Valued

Narrow-moat Adidas' second-quarter results matched its July 24 preannouncement and our revised forecast (see our prior note). Also, the firm maintained its 2023 outlook for a currency-neutral mid-single-digit sales decline and operating loss of about EUR 450 million. However, this guidance excludes the impact of expected Yeezy drops (including one that is already underway), so it is very likely too low. Yeezy generated about EUR 400 million in sales (roughly 7% of total) in the second quarter and could generate a greater amount in the third. We intend to revisit our expectations and our fair value estimates of EUR 167/$92. We view Adidas' shares and ADRs as fully valued.