Adidas lowers forecast amid Yeezy split

Adidas has lowered its full year guidance for FY22 with total revenues now expected to grow at a low-single-digit rate and net income from continuing operations will reach around €250m (£219m), following Adidas’ decision to terminate its ‘Yeezy’ partnership with Kanye West on 25 October which sees “high seasonality” towards Q4. 

Adidas has also seen the further deterioration of traffic trends in Greater China, increasing supply chain costs and a total one-off costs of around €500m (£438.6m), which are expected to “negatively” impact the company’s net income from continuing operations.

The company’s gross margin is now expected to be around 47% in 2022, and its operating margin is forecast to be around 2.5% in FY22.

During the third quarter ending 30 September (Q3), Adidas saw its income-before-tax drop 34.7% to €411m (£360.58m), and operating profit decreased 16% to €564m (£494.8m). Net income also dropped 64.2% from €984m (£863m) to €352m (£308.8m).

Overall, Greater China saw a 18.9% drop in sales over Q3, although Latin America saw a 56.4% rise in sales.

Meanwhile, currency-neutral sales up 4% following double-digit growth outside Greater China and double-digit growth in e-commerce in EMEA, North America, and Latin America.

The news comes as Adidas announced the appointment of Bjørn Gulden, Puma’s chief executive (CEO), as the company’s new CEO after Kasper Rorsted steps down on 11 November.

Harm Ohlmeyer, Adidas chief financial officer, said: “We saw a significant inventory buildup across the industry, leading to higher promotional activity during the remainder of the year which will increasingly weigh on our earnings. We are encouraged by the enthusiasm for the upcoming FIFA World Cup which is already noticeable in our Football revenue growth.”

Thomas Rabe, chairman of the Supervisory Board of Adidas, added: “We are very pleased to welcome Bjørn Gulden back at adidas. Bjørn Gulden brings almost 30 years of experience in the sporting goods and footwear industry. As a result, he knows the industry extremely well and draws on a rich network in sport and retail.

“We would like to thank Kasper Rorsted for his major achievements at Adidas. He strategically repositioned the company and fast-forwarded its digital transformation. In North America, the world’s largest sporting goods market, Adidas has doubled its sales.”