Germany' Adidas posts flat revenue growth in FY23, exceeds projections

01 Feb '24

2 min read

Pic: Robert - stock.adobe.com

Insights

Adidas reported flat currency-neutral revenues in FY23, defying projections of a decline, but saw a 5 per cent decrease in reported sales to €21.427 billion.
The discontinuation of Yeezy and strategic wholesale reductions impacted sales.
Gross margin improved to 47.5 per cent.
Operating profit fell to €268 million from €669 million in FY22.

Germany-based global sportswear brand Adidas has reported flat preliminary unaudited currency-neutral revenues in fiscal 2023 (FY23), compared to the previous year. This performance defies the company's earlier projection of a low-single-digit decline. However, in reported terms, Adidas experienced a 5 per cent decline in sales, totalling €21.427 billion in FY23, down from €22.511 billion in FY22.

The company's sales in FY23 were significantly affected by a strategic reduction in sell-in to the wholesale channel, part of Adidas's successful efforts to lower high inventory levels. Additionally, the discontinuation of the Yeezy business negatively impacted its revenue, accounting for an approximate €500 million drag on year-over-year comparison. Despite this, the two Yeezy product launches in 2023 contributed around €750 million to net sales. This is in contrast to more than €1,200 million generated from Yeezy in FY22. Excluding Yeezy-related revenues for both years, Adidas's currency-neutral revenues actually saw a 2 per cent increase in FY23.

The company's gross margin saw a slight improvement, increasing by 0.2 percentage points to 47.5 per cent in FY23, up from 47.3 per cent in FY22.

Despite the severe impact of the Argentine Peso's devaluation towards the end of the year, Adidas managed to generate an operating profit of €268 million in FY23. This figure, however, is a decrease from the €669 million operating profit recorded in FY22.

Looking ahead to 2024, Adidas anticipates a mid-single-digit rate growth in currency-neutral sales. This forecast includes the planned sale of the remaining Yeezy inventory at cost, expected to generate around €250 million in sales for FY24. When excluding Yeezy revenues from the equation, Adidas's underlying business is projected to grow at a high-single-digit rate in currency-neutral terms.

“Our fourth quarter developed a little better than expected and we have decided to release preliminary numbers. For the full year, our currency-neutral revenues were flat, and we reached an operating profit of €268 million. This is €368 million better than what we guided for. The improvement is due to the better operating business of around €100 million and the decision to not write off €268 million of Yeezy inventory. Our consumer, retail and trade research has shown that we can sell this remaining inventory in 2024 for at least the cost price. This is why we have only written off inventory that was either damaged or very broken in sizes,” said Adidas CEO Bjorn Gulden.

Fibre2Fashion News Desk (DP)

More Adidas News... More Apparel/Garments News - Germany...