Adidas AG ADDYY reported a 2% decline in currency-neutral revenues for fourth-quarter FY23. In euro terms, revenues declined 8% to €4.812 billion in the quarter, including the negative translation impact of around €300 million from unfavorable currency movements.
Also the lack of any Yeezy business weighed on the year-over-year comparison in an amount of around €100 million.
Despite the significant Yeezy impact, currency-neutral footwear sales were up 8% in the fourth quarter driven by strong double-digit growth in Originals and Skateboarding.
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Apparel revenues declined 13% and that of accessories decreased 1%.
Currency-neutral sales in North America decreased 21%, EMEA declined 7%, Asia-PAcific were flat, Latin America increased 1% and Greater China jumped 37%.
The gross margin for the quarter expanded by 550 basis points to 44.6%, driven by a better business mix, lower freight costs, as well as reduced discounting.
Adidas recorded an operating loss of €(377) million compared to a loss of €(724) million last year.
Dividend: Adidas’ executive and supervisory board will recommend paying a stable dividend of € 0.70 per dividend-entitled share to shareholders at the Annual General Meeting on May 16, 2024.
Outlook: For FY24, Adidas expects macroeconomic challenges and geopolitical tensions to persist. So it sees currency-neutral sales to grow at a mid-single-digit rate.
Adidas said growth in the first half will be negatively impacted by initiatives to bring down elevated inventories in the North American market.
Unfavorable currency effects are projected to weigh significantly on the company’s profitability in 2024.
Taking the expected translational and transactional FX headwinds into account, Adidas expects to generate an operating profit of around €500 million in 2024.
Price Action: ADDYY shares closed higher by 1.91% at $105.35 on Tuesday.
Image by chinnian on Flickr
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