In releasing preliminary Q3 results, Adidas updated its full-year guidance. The company – citing the impact of Yeezy sales efforts in Q2 and Q3; €200 million in one-time costs related to a strategic review; and a potential write-off of €300 million for remaining Yeezy merchandise that represents a 25 percent improvement from a prior forecast of a €400 million write-down – is now forecasting an annual operating loss of approximately €100 million, a nearly 78 percent improvement from a previous outlook of a €450 million operating loss for the year. Total FY23 currency-neutral revenues are now expected to be down in the low-single digits versus prior guidance of a mid-single-digit drop. The company provided no guidance on gross margin development for the year.
The group’s currency-neutral sales in Q3 rose 1 percent year-over-year and were down 6 percent in euros to €5.999 billion against €6.408 billion. Operating profit fell 27.5 percent to €409 million from €564 million as the operating margin slipped by 200 basis points to 6.8 percent from 8.8 percent for the period ended Sept. 30. The company did not disclose any details about gross margin or merchandise margin development.
In Q2, Adidas saw its wholesale revenues fall by 10 percent despite double-digit growth in Greater China and Latin America. North America, where it was recently announced that President Rupert Campbell would be leaving the unit, was the worst-performing geography with a 16 percent decline in sales for the period ended June 30.
