Adidas Sees Lower Q3 Sales But Pleased With Yeezy Inventory Sale Benefit

German sportswear firm Adidas AG ADDYY disclosed Q3 FY23 preliminary results and a favorable revised FY23 outlook.

In Q3, the company reported a currency-neutral revenue increase of 1% Y/Y. On a reported basis, revenues declined 6% Y/Y to €5.999 billion. 

The company’s gross margin improved by 0.2ppt Y/Y to 49.3% in Q3. Operating profit stood at €409 million vs. €564 million a year ago, reflecting an operating margin of 6.8% vs. 8.8% prior year. 

The company benefited from selling parts of its remaining Yeezy inventory and witnessed improvement in its underlying business.

Outlook: For 2023, Adidas revised guidance for currency-neutral revenues to decline at a low-single-digit rate (vs. decline at a mid-single-digit rate previously). 

Also, underlying operating profit (excluding one-offs related to Yeezy and the ongoing strategic review) is now anticipated to be around €100 million in 2023 (vs. about the break-even level prior). 

The company now expects an operating loss of around €(100) million in 2023 (vs. a loss of €(450) million earlier). This includes the positive impact from the two Yeezy drops in Q2 and Q3, the potential write-off of the remaining Yeezy inventory of now around €300 million (previously: €400 million), and one-off costs related to the strategic review of up to € 200 million. 

Also Read: Adidas Teams Up With Sony For Exclusive Spider-Man 2 Collection: Here's How To Get Early Access

The company plans to release Q3 & 9M FY23 results on November 8, 2023.

Price Action: ADDYY shares closed higher by 4.90% at $94.61 on Tuesday.

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