Adidas Raises Full-Year Guidance and Beats Expectations in Q3 Earnings Report

Adidas, the German sportswear giant, has exceeded expectations in its third-quarter earnings report and raised its full-year guidance. The company benefited from the sales of its Yeezy inventory, the signature line of sneakers developed in collaboration with rapper Kanye West.

In a surprise preliminary estimates release, Adidas projected a full-year operating loss of 100 million euros ($106 million), a significant improvement from its previous forecast of a 450 million euro loss. Additionally, the company expects revenues to decline at a low-single-digit rate for 2023.

The third-quarter operating profit for Adidas came in at 409 million euros, slightly lower than the 564 million euros for the same quarter in the previous year. However, the company stated that the underlying business performed better than expected.

Adidas terminated its partnership with Kanye West, who now goes by the name Ye, in October 2022 due to the rapper’s offensive and antisemitic remarks. Since then, Adidas has been working to sell off its remaining inventory of Yeezy sneakers.

The positive impact of the sale of parts of the Yeezy inventory in the second and third quarters, along with the potential write-off of the remaining Yeezy inventory (now valued at around €300 million), has contributed to the improved financial outlook for 2023. The company also cited one-off costs related to the strategic review, up to €200 million, which remain unchanged.

Following the release of the earnings report, Adidas shares surged by 4% during early trade in Europe on Wednesday.

Overall, Adidas’s better-than-expected performance in the third quarter, fueled by the Yeezy inventory sales and the overall strength of its core business, led to the upward revision of the full-year guidance. The company’s strategic efforts to address the challenges and capitalize on growth opportunities have played a significant role in its improved financial outlook for the year.