Shares of Adidas jumped 8.2 percent on Wednesday after the company unexpectedly raised its full-year guidance and reported a year-on-year profit increase in the first quarter, reports CNBC. The German sportswear company said that it now expects currency-neutral revenues to increase at a mid-to high-single-digit rate in full-year 2024, compared with a previous projection of growth near a mid-single-digit rate. Operating profit for the year is now expected to reach around $745 million, Adidas said in its unscheduled trading update published late on Thursday.
Total Retail’s Take: How is Adidas increasing profitability? The sportswear brand has undergone many changes in recent years that could be attributing to its improved outlook. Notably, the company named Bjørn Gulden as chief executive in early 2023; sold Reebok to Authentic Brands Group for $2.5 billion in 2021, as well as the TaylorMade and CCM Hockey brands; and has been selling off its loss-making Yeezy inventory since breaking ties with Ye, the rapper formerly known as Kanye West, in late 2022.
Adidas underwent a transition year in 2023 after it lost revenue from halting the sale of its Yeezy inventory. Its leadership shakeup in 2023 was positioned to “enable a restart” after the brand struggled through the COVID-19 pandemic. The brand now expects the sale of the rest of the Yeezy inventory during the remainder of the year to result in additional sales of around 200 million euros. Adidas is also seeking a boost from its partnerships with the Olympics, Paralympics, EURO 24 and Copa events this year, which will drive exposure for the brand and its products.
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