Adidas Sales, Earnings Beat Guidance After Decision Not to Write off Most Yeezy Inventory

By Mauro Orru

Adidas said its revenue and operating profit last year exceeded company guidance after a better-than-expected performance in the fourth quarter and the group's decision not to write off most of its Yeezy inventory.

The German sporting-goods company said Wednesday that sales on a currency neutral basis were flat last year compared with 2022, better than Adidas's most recent forecast of a low-single-digit rate contraction despite the drag from the devaluation of the Argentine peso in the fourth quarter. In reported terms, annual sales slipped 5% to 21.43 billion euros ($23.24 billion).

Adidas made an operating profit of EUR268 million in 2023, down from EUR669 million in 2022. However, the result is better than company guidance of a EUR100 million operating loss. On an underlying basis, operating profit came in at roughly EUR200 million in 2023, also above guidance of around EUR100 million.

"The improvement is due to the better operating business of around EUR100 million and the decision to not write off EUR268 million of Yeezy inventory," said Chief Executive Bjorn Gulden. "Our consumer, retail and trade research has shown that we can sell this remaining inventory in 2024 for at least the cost price."

Gulden is expecting a "flattish" start to sales this year, but revenue should then improve every quarter. The group is targeting currency-neutral sales growth at a mid-single-digit rate and an operating profit of around EUR500 million in 2024.

"This year is the next building block needed to bring Adidas back to be a company with double-digit growth and 10% operating margin," Gulden said.

Write to Mauro Orru at mauro.orru@wsj.com

(END) Dow Jones Newswires

January 31, 2024 13:14 ET (18:14 GMT)

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