Adidas upbeat after solid third quarter

29th Oct 2024 12:45

(Sharecast News) - Adidas reported robust third-quarter earnings on Tuesday, with 10% currency-neutral revenue growth driven by the underlying brand, which rose 14%.

Total sales reached €6.4bn, marking a 7% increase in euro terms.

The brand's momentum was underpinned by double-digit growth across various product categories and geographies, with footwear - especially Originals and Sportswear - leading the surge.

Footwear sales climbed 14%, fuelled by demand in both lifestyle and performance segments.

Apparel meanwhile saw a 5% increase, supported by strong growth in football-related products.

Revenue from lifestyle lines, bolstered by popular franchises such as Samba and Gazelle, contributed significantly, while collaborations with names like Bad Bunny added further appeal.

Accessories returned to growth, climbing 10%.

Regionally, Adidas said Europe, Latin America, and Asia saw double-digit growth, while North America faced a 7% decline, attributed primarily to the reduction in Yeezy-related sales.

Adidas's gross margin improved to 51.3%, up by two percentage points, driven by a favourable product mix, lower costs, and reduced discounting, although currency headwinds persisted.

Operating profit rose sharply to €598m - a notable increase from last year's €409m, and reflecting an operating margin of 9.3%.

Net income from continuing operations surged to €469m, or €2.44 per share, underscoring a strong financial recovery.

Despite a 3% decline in e-commerce sales due to the reduced Yeezy business, digital revenue excluding Yeezy grew by more than 25%, highlighting the brand's resilience in direct-to-consumer channels.

Adidas reaffirmed its full-year forecast, projecting around 10% revenue growth and an operating profit target of €1.2bn, signalling confidence in continued momentum as it headed into 2025.

"The third quarter was a very strong quarter for us and again better than expected - 14% underlying growth for the adidas brand, a very healthy gross margin above 51% and an operating profit of €598m are numbers that we are very happy with and a proof that we are moving in the right direction," said chief executive officer Bjørn Gulden.

"I am especially proud that we are growing in all regions, in all channels and now also in all product divisions.

"Double-digit growth in both lifestyle and performance shows the currently good 'balance' in our business."

Gulden said strong underlying growth in Greater China, and an earlier-than-expected turn to positive numbers for the Adidas brand in North America during the last two quarters, strengthened the company's confidence in its mid-term future.

"This shows the strength of the adidas brand and is a result of the great job our people are doing in all markets and all functions.

"With the heat we have again created for the adidas brand, we have a generational opportunity to connect with a new generation of consumers both in lifestyle and performance - and that in all markets.

"Our focus is now to continue this momentum and to build a solid platform for future growth and to make Adidas a great company again."

At 1334 CET (1234 GMT), shares in Adidas were up 2.48% in Frankfurt at €219.10.

Reporting by Josh White for Sharecast.com.