Adidas has released its preliminary results for 2023, showcasing a resilient performance despite facing headwinds from currency devaluations and strategic shifts. The sportswear giant reported flat currency-neutral revenues compared to the previous year, defying expectations of a decline. However, in reported terms, sales experienced a 5% decline to €21,427 million, attributed in part to unfavorable currency movements amounting to over €1,000 million.
The sales trajectory in 2023 was influenced by strategic decisions, including a reduction in wholesale channel inventory levels and the discontinuation of the Yeezy business, resulting in a negative impact of approximately €500 million on revenue. Notably, excluding Yeezy revenues, currency-neutral revenues saw a modest 2% increase.
Despite challenges, Adidas managed to improve its gross margin slightly to 47.5%, although negative currency effects persisted throughout the year. Operating profit for 2023 stood at €268 million, surpassing expectations of a €100 million loss, driven by operational efficiency gains in Q4 and a decision not to write off a significant portion of Yeezy inventory.
Looking ahead to 2024, Adidas anticipates mid-single-digit growth in currency-neutral sales, contingent upon selling the remaining Yeezy inventory at cost, expected to yield approximately €250 million in revenue. Excluding Yeezy, the company forecasts high-single-digit growth in its underlying business.
Adidas CEO, Bjørn Gulden, expressed optimism regarding the company's trajectory, citing improved consumer engagement, product offerings, and operational agility. Despite acknowledging current financial challenges, Gulden emphasized Adidas' commitment to re-establishing itself as a market leader, highlighting strategic investments in marketing, sales, and product innovation.
For 2024, Adidas aims to steadily improve sales throughout the year, projecting high-single-digit growth in its underlying business and a 10% increase in the second half. Despite uncertainties, including currency fluctuations and market dynamics, the company targets an operating profit of approximately €500 million, marking another step towards achieving double-digit growth and a 10% operating margin.
