adidas Reports Flat Sales and Decreased Operating Profit in 2023
Grappling to come back from its YEEZY loss, the German sportswear brand expects to see strong growth in the second half of 2024.
adidas on Wednesday revealed its full-year financial results for 2023, reporting better-than-expected figures, despite failing to meet analysts’ expectations. In the 12 months, net sales tallied €21.4 billion EUR, down 4.8% from 2022’s €22.5 billion EUR. However, the figure was flat on a currency-neutral basis.
The German sportswear company is still on the mend, after losing its popular YEEZY line and severing ties with Ye at the tail-end of 2022, following a Twitter rampage that included his challenging of Jewish identities, his perpetuation of harmful conspiracy theories, and his threat to “death con 3 on JEWISH PEOPLE.” The brand noted that it would have seen a 2% increase in currency-neutral sales over 2023, if YEEZY revenues were excluded in both years.
“Despite losing a lot of YEEZY revenue and a very conservative sell-in strategy, we managed to have flat revenues,” said adidas CEO Bjørn Gulden. “We expected to have a substantial negative operating result, but achieved an operating profit of €268 million EUR. With a very disciplined go-to-market and buying process, we reduced our inventories by almost €1.5 billion EUR. With the exception of the US, we now have healthy inventories everywhere.”
The company’s operating profit was almost €1 billion EUR higher than expected, due, in part, to the company’s decision to sell remaining YEEZY inventory. However, the figure was still down 59.9% from the prior year’s €669 million EUR.
Despite YEEZY’s impact, adidas’ footwear sales increased by 4% on a currency-neutral basis over the year. Elsewhere, accessories were up 3%, and apparel fell 3%.
The brand’s Lifestyle category saw currency-neutral revenues fall, due to the termination of its YEEZY collaboration. However, higher demand and increasing supply for the label’s Samba, Gazelle, Spezial, and Campus franchises resulted in mid-single-digit top-line growth in Originals and double-digit growth in Skateboarding. Basketball, too, experienced double-digit growth, thanks to its newly-introduced basketball apparel collection, signature footwear models and Fear of God product lineup.
In North America, adidas’ sales decreased by 16.1% to €5.22 billion EUR, and sales fell 0.4% in Europe, the Middle East and Africa to €8.23 billion EUR. In Latin America, however, the company saw a 21.6% increase, with sales tallying €2.29 billion EUR. In Greater China, adidas’ sales climbed 8.2% to reach €3.19 billion EUR; and in Asia-Pacific, the brand’s revenues increased 7% to hit €2.25 billion EUR.
Looking to 2024, adidas expects currency-neutral revenues to increase at a “mid-single-digit rate,” and the company’s remaining YEEZY inventory is “assumed to be sold at cost.” The brand expects an operating profit of approximately €500 million EUR. “We should see some growth already in Q1, but I expect growth to be stronger in the second half of the year,” Gulden said.
See adidas’ full-year financial report for 2023 here.
