With its brand displaying momentum across many global regions, Adidas is ready to deliver currency-neutral revenue growth of approximately 10 percent in 2024 and poised to lunge forward with a business model driven by a new generation of consumers and an overall strategy as a global brand “with a very local mindset,” opined Adidas AG CEO Bjørn Gulden. He said the company is cognizant that the American, European, Chinese and Indian markets have different consumer sets with diverse product needs based on different activities.
In Q3, the group delivered 10 percent currency-neutral sales growth to €6,438 million, which included a 14 percent increase in Adidas brand sales. Lifestyle and performance segment sales each grew by double-digits, and gross margin improved by 200 basis points to 51.3 percent. Footwear sales rose 14 percent on a currency-neutral basis in Q3, fueled by strong double-digit growth in Originals. Apparel sales improved by 5 percent, and accessory revenues increased by double-digits. Currently standing at approximately 34 percent of all revenues, apparel sales are forecast to accelerate in both 2025 and 2026.
Operating profit rose by 46 percent in Q3 to €598 million from €409 million. Regionally, on a currency-neutral basis, all geographies except North America and Greater China posted double-digit sales gains.
| Adidas - Income | |||
|---|---|---|---|
| 2024 | 2023 | Change | |
| Quarter ended Sept. 30 (€ million) | |||
| Net sales | 6,438 | 5,999 | 7.3% |
| Cost of sales | 3,137 | 3,044 | 3.1% |
| Gross profit | 3,301 | 2,955 | 11.7% |
| Royalty and commission income | 20 | 20 | 0.0% |
| Other operating income | 113 | 5 | 2160.0% |
| Other operating expenses | 2,837 | 2,570 | 10.4% |
| Operaing profit | 598 | 409 | 46.2% |
| Financial income | 29 | 31 | -6.5% |
| Financial expenses | 25 | 115 | -78.3% |
| Pre-tax | 601 | 326 | 84.4% |
| Tax | 133 | 55 | 141.8% |
| Net income from continuing operations | 469 | 270 | 73.7% |
| Gain from discontinued operations, net of tax | 7 | 10 | -30.0% |
| Net income | 476 | 280 | 70.0% |
| Diluted EPS from continuing operations | 2.44 | 1.40 | 74.3% |
| Diluted EPS from continuing and discontinued operations | 2.48 | 1.45 | 71.0% |
| Nine months ended Sept. 30 (€ million) | |||
| Net sales | 17,718 | 16,616 | 6.6% |
| Cost of sales | 8,662 | 8,579 | 1.0% |
| Gross profit | 9,056 | 8,036 | 12.7% |
| Royalty and commission income | 56 | 66 | -15.2% |
| Other operating income | 121 | 62 | 95.2% |
| Other operating expenses | 7,953 | 7,519 | 5.8% |
| Operaing profit | 1,280 | 646 | 98.1% |
| Financial income | 71 | 61 | 16.4% |
| Financial expenses | 201 | 226 | -11.1% |
| Pre-tax | 1,150 | 480 | 139.6% |
| Tax | 299 | 138 | 116.7% |
| Net income from continuing operations | 851 | 343 | 148.1% |
| Gain from discontinued operations, net of tax | 1 | 2 | -50.0% |
| Net income | 851 | 345 | 146.7% |
| Diluted EPS from continuing operations | 4.49 | 1.69 | 165.7% |
| Diluted EPS from continuing and discontinued operations | 4.50 | 1.70 | 164.7% |
| Source: Adidas | |||
But Gulden and the Adidas team are “very optimistic” about the future of the group’s North American market thanks to a building order book over the next several quarters and redolent that Greater China’s Adidas brand business grew by 8 percent in Q3.
The 75-year-old company’s go-forward retail strategy in Greater China, where Q3 sales rose by 8.6 currency-neutral to $2,665 million is likely to focus on expansion into smaller cities where the brand and its China-sourced products will compete head-to-head with local market brands. Adidas will end FY24 with 200+ stores in Greater China.
| Adidas - Net sales | |||
|---|---|---|---|
| 2024 | 2023 | Change | |
| Quarter ended Sept. 30 (€ million) | |||
| Europe | 2,152 | 1,812 | 18.8% |
| North America | 1,362 | 1,484 | -8.2% |
| Greater China | 946 | 870 | 8.7% |
| Emerging markets | 910 | 834 | 9.1% |
| Latin America | 677 | 621 | 9.0% |
| Japan / South Korea | 361 | 318 | 13.5% |
| Other businesses | 29 | 38 | -23.7% |
| Nine months ended Sept. 30 (€ million) | |||
| Europe | 5,797 | 4,913 | 18.0% |
| North America | 3,786 | 4,060 | -6.7% |
| Greater China | 2,665 | 2,520 | 5.8% |
| Emerging markets | 2,371 | 2,106 | 12.6% |
| Latin America | 1,965 | 1,812 | 8.4% |
| Japan / South Korea | 1,021 | 991 | 3.0% |
| Other businesses | 85 | 165 | -48.5% |
| Source: Adidas | |||
Elsewhere in the world, Adidas intends to utilize franchisees to establish solid footprints and consumer bases in countries such as Iraq, Bangladesh, Azerbaijan, Vietnam and Nigeria.
On the product front, Gulden said the company needs to get its lifestyle business humming but is already seeing big consumer interest for its low-profile footwear style from consumers in Asia where it has been launched in China, Japan, and Korea. Further, the brand is slated to take its new, comfort style, the Aruku, mainstream in H1/25 and relaunch its white/black and black/white Superstar court shoe next year.
Meanwhile, the company’s business relationship with the musician Ye, formerly Kanye West, is nearing a close. The two parties have reached a settlement and the company’s last €50 million worth of Yeezy inventory should be sold through by the end of Q4. In Q3, Yeezy sales netted Adidas approximately €200 million in sales.
Going forward, Adidas’ growth path will be led by several new executives. Mathieu Sidokpohou, the company’s former GM for France and later GM for Southern Europe, is replacing Chief Commercial Officer Arthur Hoeld and taking over his responsibility for the brand’s global sales. Earlier this year, 27-year company veteran Martin Shankland announced he was leaving the company. And longtime company spokesperson and investor relations contact Jan Runau has announced his retirement.
