Adidas shares jumped up after the company announced a significant increase in its full-year 2024 earnings guidance. This news came following a strong performance in the second quarter, surpassing expectations. The German sportswear giant is now anticipating its operating profit to hit around 1 billion euros by the end of 2024, a notable increase from the previous estimate of 700 million euros.
The company reported an 11% increase in revenues in the second quarter compared to the same period the previous year. Excluding sales from the struggling Yeezy line, currency-neutral revenue climbed by 16% for the quarter. Adidas had earlier declared that it would not write off most of its unsold Yeezy inventory and instead opted to sell the remaining shoes. The collaboration with rapper Ye, formerly known as Kanye West, on the Yeezy line came to an end due to a series of controversial remarks made by the artist.
Operating profit for the second quarter soared to 346 million euros, a substantial rise from the 176 million recorded in the same quarter a year ago. This positive outcome prompted Adidas to revise its 2024 outlook upward for the second time this year, based on impressive first-quarter results that exceeded expectations. In April, the sportswear brand reported an operating profit of 336 million euros for the initial three months of the year, a notable increase from the 60 million posted in the corresponding quarter the prior year.
Adidas disclosed that within its revised guidance, the company anticipates selling the remaining Yeezy inventory throughout the year at an average cost. This move is predicted to generate an additional 150 million euros in sales, with no further profit contribution projected for the remainder of the year. The decision to offload the remaining Yeezy stock reflects Adidas’ strategy to focus on profitable ventures and discontinue partnerships that are no longer aligned with the brand’s values.
Overall, the market responded positively to Adidas’ robust financial performance, with investors showing confidence in the company’s ability to deliver sustained growth and profitability in the coming years. The decision to raise earnings guidance has instilled optimism among stakeholders and positioned Adidas as a formidable player in the competitive sportswear industry. With a clear focus on innovation, strategic partnerships, and operational efficiency, Adidas is well-equipped to navigate challenges and capitalize on emerging opportunities in the global market.