Adidas defies expectations with surging earnings
PUBLISHED
2024-07-17
Content
For the second time this year, German sportswear maker Adidas has boosted its earnings guidance, continuing to defy analysts who forecast doom and gloom for the company after it cut ties with rapper Kanye West in late 2022 over anti-Semitic remarks he had made.
The decision to end the deal with West left Adidas stuck with millions of sneakers in the Yeezy brand.
As a result, the company took a loss in 2023 amid claims from analysts and others that the decision had crippled the company, leaving it vulnerable to rivals like Nike.
However, nothing of the sort has happened. Nike has slumped as its sales have performed poorly.
In fact, Adidas has gone from strength to strength while its rivals have stalled.
In February of this year, Adidas announced it planned to sell its remaining Yeezy trainers for at least cost price. It did, achieving a profit of around 50 million euros in the first quarter.
This helped the company perform better than expected and forecast earnings for 2024 at around 700 million euros.
Now, Adidas believes earnings will reach 1 billion euros by the end of 2024.
This is the second lift in guidance after it revealed an upgrade in April following better-than-expected second-quarter earnings. Operating profit for 2024 at about 1 billion euros would be double what it was expecting at the start of this year.
Adidas's bounce back has seen its shares surge 25% so far in 2024, while shares in Nike, which many analysts last year claimed would surpass a weakened Adidas, have slid 32% so far this year.
Nike shares hit a four-year low in June after releasing weak fourth-quarter and full-year results.
Shares in Puma, another German rival to Adidas (founded by a brother of Adidas’s founder), have lost nearly 14% this year so far.
Nike is the biggest sportswear and trainers group globally, Adidas is second, and Puma is third.
Author
Name | Glenn Dyer | Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey. |