Adidas saw a significant increase in its stock value after revealing that it would be revising its full-year 2024 earnings guidance upwards. The German sportswear company announced that it expected its operating profit to hit approximately 1 billion euros, a substantial increase from the initial projection of 700 million euros. This news comes on the heels of better-than-expected preliminary results for the second quarter.
Adidas reported an 11% increase in revenues for the second quarter, when compared to the previous year. When excluding sales from the struggling Yeezy line, the company noted a 16% revenue growth in the quarter. The decision not to write off unsold Yeezy inventory and instead sell the remaining stock seems to have paid off for Adidas.
Adidas had collaborated with rapper Kanye West, also known as Ye, on the Yeezy line. However, the company decided to cut ties with him following a series of anti-semitic remarks. Despite ending the partnership, Adidas expects to sell the remaining Yeezy inventory at an average cost, resulting in additional sales of around 150 million euros with no further profit contribution for the rest of the year.
In the second quarter of the year, Adidas reported an operating profit of 346 million euros, a significant increase from the 176 million euros recorded in the same period the previous year. The company had previously increased its 2024 outlook after surpassing expectations with its first-quarter results. Operating profit for the first three months of the year stood at 336 million euros, a substantial improvement from the 60 million euros reported for the same quarter the previous year.
Adidas’ decision to revise its earnings guidance upwards following strong second-quarter results has been well-received by investors, leading to a rise in the company’s stock value. The brand’s strategic moves, such as the decision regarding Yeezy inventory and collaborations, have contributed to its positive financial performance and outlook for the future.
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