Adidas Raises Yearly Guidance with Boost from Yeezy Sales

Adidas Raises Yearly Guidance with Boost from Yeezy Sales

April 18, 2024 : In a positive development for investors, Adidas AG, a leading sportswear manufacturer, announced an upward revision to its full-year financial guidance. This decision comes on the heels of a surprisingly strong first quarter, fueled partly by continued sales of discounted Yeezy merchandise.

Earlier this year, Adidas severed its partnership with designer Kanye West (also known as Ye) due to a series of controversial remarks. Consequently, the company faced the challenge of offloading a significant amount of Yeezy-branded inventory. However, Adidas opted to sell this remaining stock at discounted prices, a strategy that has proven unexpectedly successful.

The company’s first-quarter earnings report revealed a 3.5% year-over-year increase in revenue, reaching €5.5 billion (approximately $6.1 billion). This growth surpassed analyst expectations. Notably, the final Yeezy release under the Adidas umbrella generated a substantial €150 million (approximately $167 million) in revenue and €50 million (approximately $56 million) in operating profit.

Beyond the Yeezy windfall, Adidas’ core business also demonstrated positive momentum. The company reported a 6.4 percentage point increase in gross margin, reaching 51.2%. This improvement reflects strong demand for Adidas’ core product lines, including footwear and apparel.

Bjørn Gulden, Chief Executive Officer of Adidas, expressed optimism regarding the company’s future prospects. He credited the turnaround to a combination of factors, including the successful Yeezy inventory clearance and the continued strength of the company’s core business. Mr. Gulden emphasized Adidas’ commitment to innovation and strategic partnerships as key drivers of future growth.

It is important to acknowledge that the long-term impact of the Yeezy sales on Adidas’ brand image remains to be seen. However, the short-term financial benefit has undoubtedly played a role in the company’s upwardly revised guidance. This revision indicates Adidas’ confidence in its ability to achieve strong financial performance for the remainder of the year.


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