German company Adidas' operating profit at €409 mn in Q3 FY23

Despite the lower profit, the company's currency-neutral revenues increased by 1 per cent compared to the prior year. However, when measured in euros, the revenues dipped by 6 per cent to €5.999 billion, down from €6.408 billion in 2022, the company said in a press release.

The sportswear giant saw an improvement in its gross margin, which ticked up 0.2 percentage points to 49.3 per cent in Q3, compared to 49.1 per cent in the same quarter of 2022. The company's performance was buoyed in part by the sale of parts of its remaining Yeezy inventory. The underlying Adidas business also fared better than expected, according to the company's statement.

Given the recent performance, Adidas has revised its full-year guidance for 2023. The company now anticipates a low-single-digit decline in currency-neutral revenues, compared to its previous expectation of a mid-single-digit decline. Furthermore, excluding any one-offs related to Yeezy and the ongoing strategic review, the underlying operating profit is now expected to reach around €100 million, up from an earlier projection of roughly breaking even.

The company also updated its outlook considering the positive impact from the two Yeezy drops in Q2 and Q3, as well as potential write-off costs. The potential write-off of the remaining Yeezy inventory is now estimated at around €300 million, reduced from the previous €400 million. One-off costs related to strategic review remain unchanged at up to €200 million. Factoring in these elements, Adidas now expects to report an operating loss of around €100 million for the full year of 2023, significantly lower than the previously estimated loss of €450 million.

Fibre2Fashion News Desk (DP)