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Adidas Q1 turns up ‘better-than-expected’ sales on Yeezy boost

German sportswear brand Adidas has attributed its "better-than-expected" first quarter (Q1) results to the €150m ($159.6m) revenue from its latest Yeezy drop, leading to an upward revision in its full-year guidance moving forward.

Adidas reported that its latest Yeezy drop generated revenues of around €150m and an operating profit of around €50m in Q1 2024

The sportswear giant expects the sale of the remaining Yeezy inventory during the remainder of the year to occur on average at cost which it believes would result in additional sales of around €200m and no further profit contribution during the remaining of the year.

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

Adidas preliminary Q1 2024 highlights

Currency-neutral revenues increased 8% versus the prior year level.
Revenue's grew 4% to €5.46bn vs €5.27bn in 2023.
Gross margin improved 6.4 percentage points to 51.2% compared to 44.8% last year.
Operating profit increased from last year's €60m to €336m in this quarter.

Adidas reported that, as a result of the "better-than-expected" performance during Q1, the company has increased its full-year guidance. It now expects currency-neutral revenues to increase at a mid- to high-single-digit rate in 2024 as opposed to the previous guidance of mid-single-digit rate increase.

Adidas forecasts operating profit to reach a level of around €200m and no further profit contribution during the remainder of the year.

However, the sportswear brand said it continues to expect unfavorable currency effects to weigh significantly on the company’s profitability in 2024. It highlighted these effects are projected to continue to negatively impact both reported revenues and the gross margin development this year.

Earlier in March 2024, Adidas performed "significantly better" than expected in its full-year 2023 (FY23) results with net sales dropping 4.8% to €21.4bn ($23.3bn) as the company continues to recover from the loss of its Yeezy line.

Adidas' CEO Bjørn Gulden said at that time: "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."