Adidas is forecasting an annual operating profit increase of 27-35 percent in 2025.
The German group, faced with the possibility of US tariff impacts and inflationary concerns on sales volume, has adopted a guarded FY25 outlook despite its stated goal of becoming the top sportswear brand in all global markets except for the US. Adidas is forecasting an annual operating profit increase of 27-35 percent this fiscal year to between €1.7 and €1.8 billion, below the lofty projections of analysts who have predicted €2.1 billion in FY25 operating income for the company. Annual revenues are expected to grow at a high single-digit rate but by more than 10 percent when excluding Yeezy sales in the comparison. Sales are projected to rise at a high-single-digit rate in Europe and Japan/South Korea but by a double-digit rate in North America, Greater China, Emerging Markets and Latin America.
Lower product and freight costs effects
In Q4, Adidas produced a €57 million operating profit against a year-ago loss of €377 million on 24 percent revenue expansion to €5,965 million. Gross margin widened by 520 basis points to 49.8 percent, helped by less discounting and lower product and freight costs. Year-over-year inventories increased by 10 percent on Dec. 31 to €4,989 million. The net loss attributable to shareholders was €39 million against a year-ago loss of €379 million.
Currency-neutral sales grew by double digits in all regions, except for Japan/Korea (+8.9%). Final period sales were up by 25 percent in Europe to €1,754 million; 14.7 percent in North America to €1,342 million; and by 16.1 percent in Greater China to €794 million. Wholesale revenues rose 25 percent to €3,264 million and Dtc sales increased by 15 percent to €2,710 million in the final period. The company ended FY24 with 838 concept stores and 1,095 factory outlet locations.
| Adidas - Revenues | ||||
|---|---|---|---|---|
| 2024 | 2023 | Change | Change (currency neutral) | |
| Q4, ended Dec. 31 (€ million) | ||||
| Europe | 1,754 | 1,389 | 26.3% | 25.0% |
| North America | 1,342 | 1,159 | 15.8% | 14.7% |
| Greater China | 794 | 670 | 18.5% | 16.1% |
| Emerging markets | 940 | 744 | 26.3% | 20.8% |
| Latin America | 807 | 479 | 68.5% | 31.4% |
| Japan / South Korea | 318 | 302 | 5.3% | 8.9% |
| Other businesses | 19 | 33 | -42.4% | -42.6% |
| FY, ended Dec. 31 (€ million) | ||||
| Europe | 7,551 | 6,302 | 19.8% | 18.9% |
| North America | 5,128 | 5,219 | -1.7% | -1.6% |
| Greater China | 3,459 | 3,190 | 8.4% | 10.3% |
| Emerging markets | 3,310 | 2,850 | 16.1% | 19.4% |
| Latin America | 2,772 | 2,291 | 21.0% | 27.6% |
| Japan / South Korea | 1,339 | 1,293 | 3.6% | 10.1% |
| Other businesses | 104 | 199 | -47.7% | -46.5% |
| Source: Adidas Group | ||||
Double-digit sales growth for Originals and more
From a product perspective, double-digit sales growth in Originals, soccer, training, performance basketball and sportswear fueled a 26 percent gain in Q4 footwear sales to €3,390 million. Apparel sales improved by 11 percent, driven by double-digit gains in soccer, running, golf, and sportswear, to €2,194 million. Accessories/gear sales rose by 7 percent to €380 million.
For FY24, Adidas generated a 12 percent increase in currency-neutral sales to €23,683 million, better than initially expected, and a more than €1 billion increase in operating income to €1,337 million from €268 million. Gross margin improved by 330 basis points to 50.8 percent as net income attributable to shareholders came in at €764 million against a year-ago loss of €75 million. Annual footwear sales rose by 17 percent on a currency-neutral basis to €13,975 million with apparel revenues up 6 percent to €8,216 million and accessories/gear sales increasing 2 percent to €1,499 million. By channel, wholesale revenues improved by 14 percent to €14,172 million and Dtc gained 11 percent on a currency-neutral basis to €9,490 million.
In Europe specifically, FY24 operating profit increased by 74 percent to €1,485 million from €852 million on currency-neutral sales growth of 19 percent to €7,551 million. Elsewhere, North America produced a 76 percent gain in operating income to €480 million despite a 2 percent drop in annual revenues to €5,128 million. Greater China annual operating profit rose by 29 percent to €714 million on 10 percent currency-neutral sales growth to €3,459 million.
| Adidas - Income | |||
|---|---|---|---|
| 2024 | 2023 | Change | |
| Q4, ended Dec. 31 (€ million) | |||
| Net sales | 5,965 | 4,812 | 24.0% |
| Cost of sales | 2,995 | 2,664 | 12.4% |
| Gross profit | 2,970 | 2,147 | 38.3% |
| Royalty and commission income | 26 | 17 | 52.9% |
| Other operating income | 53 | 10 | 430.0% |
| Other operating expenses | 2,992 | 2,551 | 17.3% |
| Operating profit | 57 | -377 | – |
| Financial income | 30 | 25 | 20.0% |
| Financial expenses | 115 | 63 | 82.5% |
| Pre-tax | -29 | -415 | 93.0% |
| Tax | -2 | -14 | 85.7% |
| Net income from continuing operations | -27 | -401 | 93.3% |
| Gain from discontinued operations, net of tax | 7 | 42 | -83.3% |
| Net income | -20 | -359 | 94.4% |
| Diluted EPS from continuing operations | -0.26 | -2.36 | 89.0% |
| Diluted EPS from continuing and discontinued operations | -0.22 | -2.13 | 89.7% |
| FY, ended Dec. 31 (€ million) | |||
| Net sales | 23,683 | 21,427 | 10.5% |
| Cost of sales | 11,658 | 11,244 | 3.7% |
| Gross profit | 12,026 | 10,184 | 18.1% |
| Royalty and commission income | 81 | 83 | -2.4% |
| Other operating income | 174 | 71 | 145.1% |
| Other operating expenses | 10,945 | 10,070 | 8.7% |
| Operating profit | 1,337 | 268 | 398.9% |
| Financial income | 101 | 79 | 27.8% |
| Financial expenses | 317 | 282 | 12.4% |
| Pre-tax | 1,121 | 65 | 1624.6% |
| Tax | 297 | 124 | 139.5% |
| Net income from continuing operations | 824 | -58 | – |
| Gain from discontinued operations, net of tax | 8 | 44 | -81.8% |
| Net income | 832 | -14 | – |
| Diluted EPS from continuing operations | 4.24 | -0.67 | – |
| Diluted EPS from continuing and discontinued operations | 4.28 | -0.42 | – |
| Source: Adidas Group | |||
