Adidas CEO, Bjorn Gulden, expressed elation as the sportswear giant exceeded expectations in its first-quarter performance for 2024. The company reported a robust surge in sales, gross margin, and operating profit, outstripping initial forecasts. Notably, the direct-to-consumer (DTC) channels witnessed a remarkable uptick in full-price sales, driving down inventories and bolstering gross margins for both Adidas and its retail partners.
The stellar growth trajectory was primarily fueled by the Lifestyle segment, particularly buoyed by the exceptional performance of Originals footwear. Additionally, the higher-tier offerings in Running, Football, and Basketball contributed significantly to the company's upward momentum. Gulden emphasized the enduring demand for iconic footwear franchises like Samba, Gazelle, Spezial, and Campus, alongside the emergence of new favorites like SL72.
Despite persisting market volatility, Adidas sees progress across all fronts, leveraging enhanced brand resonance and improved sell-through to fortify partnerships with retail allies. Gulden reiterated the company's commitment to sustained investment in product innovation, brand elevation, and sales and marketing endeavors to drive continual growth. He underscored Adidas' relentless pursuit of excellence, acknowledging the ongoing journey toward optimization.
Looking ahead, Adidas eagerly anticipates capitalizing on the global sporting extravaganza, including the Euro 2024, Copa América, Olympics, and Paralympics, fostering an environment conducive to celebrating athleticism and camaraderie.
Financially, Adidas recorded a remarkable 8 per cent increase in currency-neutral revenues for Q1, propelled by robust brand momentum. Footwear revenues soared by 13 per cent, spearheaded by Originals and Football categories, while apparel sales witnessed a modest 2 per cent uptick. Lifestyle revenues surged impressively, driven by popular franchises and successful product launches across various segments.
The company's strategic focus on bolstering DTC channels yielded significant dividends, with a staggering 20 per cent growth in this segment. Strong double-digit growth in Own Retail and E-commerce underscored Adidas' prowess in navigating evolving consumer preferences.
However, challenges persist in the North American market, where a 4 per cent decline in sales was attributed to a conservative sell-in strategy amid lingering inventory concerns. Nonetheless, Adidas demonstrated resilience, posting robust growth in Europe, Emerging Markets, and Latin America.
Adidas' gross margin surged to 51.2 per cent, reflecting healthier inventory levels, reduced discounting, and a favorable business mix. Operating profit skyrocketed to €336 million, marking a substantial improvement from the previous year. Enhanced bottom-line performance translated into net income from continuing operations of €171 million.
Inventories witnessed a notable improvement, declining by over €1.2 billion year-over-year, indicative of successful initiatives aimed at inventory optimization. Furthermore, adjusted net borrowings witnessed a significant reduction, underscoring Adidas' commitment to prudent financial management.
Buoyed by its stellar Q1 performance, Adidas revised its full-year outlook, anticipating mid- to high-single-digit revenue growth and an operating profit of around €700 million. However, significant currency headwinds pose a challenge to profitability, necessitating strategic adaptations to mitigate adverse impacts.
Adidas remains steadfast in its pursuit of excellence, leveraging innovation, and strategic partnerships to navigate dynamic market conditions and sustain robust growth momentum.
