Adidas, the renowned sportswear giant, has raised its full-year earnings guidance following a “better than expected” second quarter, showcasing an 11 percent revenue increase compared to the previous year. The company’s sales grew by 9 percent, reaching $6.3 billion (€5.822 billion), excluding Yeezy sales from both years. Currency-neutral revenues saw a substantial 16 percent increase.
Improved Margins and Profits
Adidas reported a gross margin of 50.8 percent in Q2, a reflection of improved sell-throughs, reduced discounting, lower sourcing costs, and a more favorable category mix. The company’s operating profit for the second quarter surged to $347 million (€346 million), which included a $54 million (€50 million) contribution from the sale of parts of the remaining Yeezy inventory.
Revised Full-Year Guidance
Given the robust performance, Adidas has updated its full-year guidance, now expecting currency-neutral revenues to increase at a high-single-digit rate, an upgrade from the previous mid- to high-single-digit range. The company’s annual operating profit is projected to reach around $1.1 billion (€1 billion), up from the previous estimate of $763 million (€700 million).
Yeezy Inventory and Future Expectations
Adidas anticipates additional sales of approximately $163.5 million (€150 million) from the remaining Yeezy inventory for the remainder of the year. However, the company does not expect further profit contributions from these sales. Despite the positive outlook, Adidas acknowledges that unfavorable currency effects are likely to impact profitability significantly throughout the year, affecting both reported revenues and gross margin development.
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