For the 12 months ended 31 December 2023 (FY23) Adidas saw currency-neutral sales flat versus prior year. It reported an operating profit of €268m, which the sports brand described as being almost €1bn better than initially expected.

Adidas CEO Bjørn Gulden said: “Although by far not good enough, 2023 ended better than what I had expected at the beginning of the year. Despite losing a lot of Yeezy revenue and a very conservative sell-in strategy, we managed to have flat revenues.”

Adidas terminated its Yeezy partnership with rapper Kanye West in October 2022 due to claims of antisemitism.

Global Data apparel analyst Alice Price suggested the brand’s performance was reflective of the loss of its Yeezy business, which drew in €1.2bn in revenue in FY2022.

Price believes this result is “significantly better” than previous projections as Adidas had predicted high-single-digit decline in 2023 sales in constant currency, but the decision to sell off Yeezy stock generated €750m in revenue.

Gulden admitted the company still has a lot of work to do, but, he added: “I feel very confident we are on the right track. We will bring Adidas back again. Give us some time and we will again say – we got this!”

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Adidas reported that even with the Yeezy impact, currency-neutral footwear sales were up 4% in 2023, reflecting a strong double-digit growth in Football as well as in Specialist and US Sports. A high-single-digit increase in Originals also helped reach the top-line improvement in footwear.

Apparel revenue declined 6% on a currency-neutral basis, due to high inventory levels in the marketplace and Adidas’ disciplined sell-in to the wholesale channel in response to it.

North America continues to be an issue for the sportwear brand as over the year sales dropped 16% to €5.22bn. Price said this was down to “reduced wholesale stock” and Adidas’ reduced inventory levels, as well as the “unfavourable economic climate inhibiting consumer appetite.”

However Adidas explained its North American market is still particularly affected by the negative Yeezy impact.

Latin America, which is described by Price as the company’s “star performer” in terms of revenue growth saw sales increase by 22% to €2.29bn, reflecting double-digit improvement in both wholesale and direct-to-consumer (DTC).

In the company’s largest territory, Europe, the Middle East and Africa (EMEA) sales were flat on a currency-neutral basis falling 0.4% to €8.23bn in 2023.

Revenues in Asia-Pacific grew 7% whilst Greater China currency-neutral sales were up 8.2%, driven by strong double-digit growth in both wholesale and Adidas’ retail stores.

Price noted the growth in both Greater China and Asia-Pacific was “aided by the region’s growing urban and middle-class populations, alongside continued pent-up demand in China since the removal of lockdown restrictions at the end of 2022″.

Key results from Adidas FY23:

  • Revenues declined 4.8% to €21.4bn compared to €22.6bn in 2022
  • Operating profit of €268m was almost €1bn better than initially expected.

Adidas says China’s Q4 recovery will power growth

Adidas said that China’s sales were expected to grow at a double-digit rate this year, after increasing 37% in the fourth quarter of 2023 due to strong growth in wholesale and retail.

Adidas anticipates that its primary market in China will continue to rebound throughout the year, providing a significant boost for the sportswear brand, which is facing challenges amid a slowdown in the US.

From a channel perspective, the company’s top-line development in the fourth quarter reflects declines in both wholesale and DTC, which were both mainly related to declines in North America.

Key results from Q4:

  • Net sales dropped 8% to €4.8bn from €5.2bn the prior year
  • An operating loss of €377m compared to €724m in 2022
  • Gross margin increased 5.5 percentage points to 44.6%

Adidas expects a mid-single-digit increase in currency-neutral sales for 2024

Adidas’ top-line guidance assumes that it will sell the remaining Yeezy inventory at cost, which would result in sales of around €250m in 2024, compared to Yeezy revenues of around €750m in 2023.

Excluding the Yeezy revenues in both years, the top-line guidance reflects currency-neutral growth at a high-single-digit rate in the underlying Adidas business.

“In terms of FY2024 outlook, Adidas still has a long way to go before it regains its former status in the market,” said Price. “It plans to continue investing in strengthening its product assortment and is expected to continue leveraging the power of collaborations with brands and sports figures to increase its relevance.”

Adidas expects significant growth in all markets, except North America, for currency-neutral revenues in the underlying business, excluding Yeezy revenues in both years. Currency-neutral sales in North America are expected to decline at a mid-single-digit rate in 2024.