Adidas published preliminary FY23 results and sales and operating profit guidance for FY24 yesterday. In a statement, CEO Bjørn Gulden said the outlook for FY24 is “the next building block needed to bring Adidas back to a company with a double-digit growth and 10 percent operating margin.”
Markets in Europe and the US. did not react positively to the group’s preliminary or forecasted financial details. Adidas shares fell 1.95 percent to €176.12 in Europe and by 9.4 percent to $88.12 in the US.
The preliminary group reported revenues fell by 5 percent in FY23 to €21,427 million and were impacted by more than €1,000 million of negative currency movements, which are expected to continue as an issue this fiscal year. Lower sell-ins into the wholesale channel, done to help reduce high inventory levels, and the discontinuation of its Yeezy business were an aggregate €500 million drag on annual revenues. Adidas did sell €750 million worth of Yeezy products in FY23, but that was more than 37 percent lower than the more than €1,200 million sold in FY22.
Meanwhile, the group’s FY23 operating profit of €268 million was 60 percent lower than the €669 million achieved in the prior year but was stronger than a forecasted operating loss of €100 million. A robust operational performance in Q4, coupled with a decision not to write off most of its remaining Yeezy inventory, bolstered the better-than-forecast results. Now, Adidas intends to sell its remaining Yeezy products at least at cost in 2024.
As for the FY24 outlook, Adidas is currently forecasting currency-neutral sales growth in the mid-single digit range, including the impact of the Yeezy sell-off and a high-single-digit sales growth rate in the underlying Adidas business. FY24 sales are expected to begin “flattish” but improve every quarter and increase by at least 10 percent in H2. The annual operating profit will be approximately €500 million in FY24.
