A file picture showing Yeezy shoes made by Adidas on display at Kickclusive, a sneaker resale store, in New Jersey. Photo: AP
LONDON: Adidas sales should fall only slightly in 2023, a better outcome than previously expected, the sportswear giant said on Thursday, confirming strong demand for its remaining Yeezy shoe stocks helped narrow a projected full-year loss.
The upgraded guidance follows a 40% jump in Adidas shares since the start of the year as investors bet on CEO Bjorn Gulden's ability to turn the company around after a chaotic break-up with Yeezy designer Ye, the rapper previously known as Kanye West, over his antisemitic comments.
Sales of surplus Yeezy shoes generated around 400 million euros ($437 million) in the second quarter, helping Adidas reduce its predicted loss for the year to 450 million euros, down from the 700 million euro loss previously expected.
In currency-neutral terms, overall sales were flat compared to the second quarter of 2022, while they were down 5% in euro terms, to 5.3 billion euros.
Adidas said it now expected currency-neutral revenues to decline at a mid-single-digit rate in 2023, from the high-single-digit rate previously estimated.
Gross margins increased by 0.6 percentage points to 50.9% in the quarter thanks to less discounting.
"For Adidas to sell the Yeezy stock well, without a lot of negative media or consumer backlash, is a good outcome," said Cristina Fernandez, managing director and senior research analyst at Telsey Advisory Group in New York.
The next Yeezy stock sales are also likely to attract strong demand but may not be as profitable as the first drop, Fernandez said, as Adidas is including wholesale partners rather than only selling through its own channels.
Adidas said its second release of Yeezy shoes, announced last Friday, was not accounted for in its 2023 outlook. JD Sports said it had started selling Yeezy products from that second drop on Wednesday.
The company said second-quarter sales in Greater China grew by 16.4% in currency-neutral terms, an indication that efforts to reboot its brand there are starting to bear fruit.
Gulden said in March Adidas would increase its focus on sports in China and sponsor more Chinese athletes.
The brand has made steps in that direction: in June it signed 17-year-old Chinese breakdance athlete Liu Qingyi, and in July announced a collaboration with Shanghai-based fashion designer Shuting Qiu for a collection inspired by women's football.
North America was the laggard, with sales dropping 16.4% in currency-neutral terms, which Adidas put down to high inventory levels there. - Reuters
