Admin I Thursday, July 18, 2024
BERLIN – Preliminary operating profit at German sportswear giant Adidas rose in the second quarter, the company reported on Tuesday.
Preliminary operating profit increased to €346 million ($377 million), up from last year’s €176 million. The latest quarter results included a contribution of around €50 million from the sale of parts of the remaining Yeezy inventory.
Quarterly currency-neutral revenues increased 11% from the prior year. In euro terms, quarterly revenues grew 9% to €5.822 billion, from €5.343 billion in the previous year.
Excluding Yeezy sales – the remaining products from the company’s cancelled partnership with controversial rapper Kanye West – in both years, currency-neutral revenues increased 16% during the quarter.
The company said it has raised its full-year guidance due to a stronger-than-anticipated performance in the quarter and ongoing positive momentum.
Adidas now expects currency-neutral revenues to increase at a high-single-digit rate in 2024. Previously, it was expected to increase at a mid- to high-single-digit rate.
The company now projects annual operating profit to reach a level of around €1 billion. Previously, it was expected to reach a level of around €700 million.
In its guidance, the company assumes the sale of the remaining Yeezy inventory during the remainder of the year to occur on average at cost.
This would result in additional sales of around €150 million and no further profit contribution during the remainder of the year. The company continues to expect unfavorable currency effects to weigh significantly on the company’s profitability this year.
These effects are negatively impacting both reported revenues and the gross margin development in 2024. This was particularly the case during the first half of the year.
