Adidas forecasts jump in 2024 profits

(Sharecast News) - Adidas has forecast a jump in full-year profits, as it continues to draw a line under its Yeezy partnership with controversial rapper Kanye West. The German sportswear giant said that after taking into account both forex headwinds and a decision not to write down its remaining Yeezy inventory, it now expected to generate 2024 full-year operating profits of around €500m.

That would represent €232m improvement on the current year.

The update came as the firm posted unscheduled preliminary numbers late on Wednesday for the 2023 full year.

It said sales fell 5% on a reported basis, to €21.4bn, though on a currency neutral basis they were flat.

Adidas said the devaluation of the Argentine peso had a "severe impact", with total unfavourable currency movements costing it €1bn.

Operating profits fell to €268m from €669m a year previously. However, that far outstripped forecasts for a €100m loss.

Bjorn Gulden, chief executive, said: "Our fourth quarter developed a little better than expected, and we have decided to release preliminary numbers.

"The improvement is due to the better operating business of around €100m and the decision not to write off €268m of Yeezy inventory. Our consumers, retail and trade research has shown that we can sell this remaining inventory in 2024 for at least the cost price.

"We do of course know that our financial performance is not good. But we are on the way of making Adidas a good company again."

Sales were forecast to start "flattish" in 2024, before improving each quarter. Stripping out the impact of Yeezy, annual sales are expected to grow in the high single digits.

Adidas cut ties with West in 2022, ending a high-profile and lucrative partnership after the rapper made a number of anti-Semitic comments. Demand for Yeezy trainers, however, remains strong.

As at 1210 GMT on Thursday, shares in the Frankfurt-listed stock were down 5%.