Adidas reported preliminary results for the third quarter of 2023 revealing that Q3 currency-neutral revenues increased 1 percent versus the prior-year period. In euro terms, the company’s revenues declined 6 percent to €6.00 billion from €6.41 billion in Q3 2022.
The company’s gross margin improved 20 basis points to 49.3 percent of sales in Q3, compared to 49.1 percent in the prior-year period. Operating profit reached €409 million during the quarter, compared to €564 million in Q3 last year, reflecting an operating margin of 6.8 percent of sales this year versus 8.8 percent in the 2022 third quarter.
While the company’s performance in the quarter was again positively impacted by the sale of parts of its remaining Yeezy inventory, the company said the underlying Adidas business also developed better than expected.
Consequently, the company has updated its full-year guidance:
Adidas now expects currency-neutral revenues to decline at a low-single-digit rate in 2023 compared to its previous forecast of a mid-single-digit decline.
The company’s underlying operating profit – excluding any one-offs related to Yeezy and the ongoing strategic review – is now anticipated to reach a level of around €100 million in 2023 versus previous expectations for “about break-even” level.
Including the positive impact from the two Yeezy drops in Q2 and Q3, the potential write-off of the remaining Yeezy inventory in now said to be around €300 million versus previous estimates for a write-off of approximately €400 million, and one-off costs related to the strategic review of up to €200 million, which is unchanged.
Adidas now expects to report an operating loss of around €100 million in 2023, a considerable improvement from its previous estimates for a loss of €450 million for the year.
