Adidas raises FY profit guidance amid strong Q1
As a result of the better-than-expected performance during the quarter, the company now expects currency-neutral revenues to increase at a mid- to high-single-digit rate in 2024
Adidas has upped its profit guidance for the year after it revealed its Q1 profits increased to €336m (£287m), up from €60m (£51m) the previous year.
In Q1, the sportswear giant reported currency-neutral revenues increased 8% versus the prior year level. In euro terms, the company’s revenues grew 4% to €5.45bn (£4.6bn) up from €5.27bn (£4.5bn).
The company’s gross margin also improved 6.4 percentage points to 51.2% during the quarter.
As a result of the better-than-expected performance during the quarter, the company now expects currency-neutral revenues to increase at a mid- to high-single-digit rate in 2024. The company’s operating profit is now expected to reach a level of around €700m (£599m) up from €500m (£428m).
It comes as the latest Yeezy drop generated revenues of around €150m (£128m) and an operating profit of around €50m (£42.8m) in the first quarter.
In its guidance, the company assumes the sale of the remaining Yeezy inventory during the remainder of the year to occur on average at cost. This would result in additional sales of around €200m (£171m) and no further profit contribution during the remainder of the year.
Adidas added it expects unfavourable currency effects to weigh significantly on the company’s profitability this year. These effects are projected to continue to negatively impact both reported revenues and the gross margin development in 2024.
The news comes after Adidas has posted its first loss in more than three decades following the financial blow from abandoning its deal with the rapper Kanye West.
The group reported a loss of €58m (£50m) in 2023 compared with €254m (£217m) profit in the prior year.
The company also reported a 5% decrease in revenues to €21.4bn (£18.3bn), with the discontinuation of its Yeezy line causing a drag of around €500m (£427m).
