Adidas, the German sportswear giant, announced its first yearly loss in almost 30 years on Wednesday and issued a warning that North American sales would decline once more due to the high inventory levels facing American sportswear retailers.
After severing ties with Kanye West in October 2022 and pausing sales of the immensely successful Yeezy shoe brand, Adidas has been struggling to make amends.
During the first year of his appointment as CEO, Bjorn Gulden decided to enhance sales of popular items like Samba and Gazelle shoes and strengthen his ties with retailers. He also decided to resume selling Yeezy trainers in order to clear off remaining stock. Since he came control, Adidas shares have recovered, beating those of Nike and Puma.
"Although by far not good enough, 2023 ended better than what I had expected at the beginning of the year," Gulden said.
As of 11:15 GMT, shares of Adidas were trading unchanged.
Adidas projects that sales in North America will decline by about 5% this year, indicating that the region will remain weak.
Sportswear and apparel firms have been negatively impacted by lower demand and overstocked retailers in the United States. Adidas reported that sales in North America decreased by 16% over the course of the year and by 21% in the fourth quarter.
Overall, according to Gulden, Adidas was able to reduce stocks by 24% in 2023, saving 1.5 billion euros, thanks to the clearance of merchandise through its outlet outlets.
Due to the Red Sea crisis, Adidas has reported supply delays of two to three weeks. Chief Financial Officer Harm Ohlmeyer stated on Wednesday that if the interruptions persist, working capital may be impacted.
Adidas is taking a chance on its ability to reclaim market share from competitors despite a general downturn in consumer demand for sportswear, which has led to job losses at Nike.
Adidas anticipates bettering its core business in 2024, with growth of at least 10% in the second half, excluding Yeezy.
Benefiting from the popularity of low-rise suede 'terrace' trainers like the Samba and Gazelle, it increased production last year. In the fourth quarter, footwear sales increased by 8% thanks to this trend, while garment sales decreased by 13%.
"Things have clearly been going in the right direction at Adidas since Bjorn Gulden took over," said Thomas Joekel, portfolio manager at Union Investment. "Brand heat is increasing, which can also be seen from the fact that fewer products now have to be sold at a discount."
Adidas anticipates a more robust comeback in China, where sales will expand at a double-digit rate following an 8% rise in 2023.
Adidas said it will sell the sneakers "at least at cost" last month, setting low expectations for the remaining Yeezy merchandise. Its most recent release was released on February 26, although it's hard to gauge how popular the sneakers will be.
Despite the firm managing the sales efficiently thus far, Cristina Fernandez, analyst at Telsey Advisory Group, stated that the Yeezy sales are "still a little bit of a wild card."
Adidas generated a profit of 300 million euros from the sale of Yeezy last year, bringing in 750 million euros. The business allocated 140 million euros to organisations that combat racism and antisemitism.
Adidas' board has decided to keep the dividend at 0.70 euros ($0.7650) per share for 2023, even though the company had its first financial loss since 1992.
(Source:www.thedailystar.net)
After severing ties with Kanye West in October 2022 and pausing sales of the immensely successful Yeezy shoe brand, Adidas has been struggling to make amends.
During the first year of his appointment as CEO, Bjorn Gulden decided to enhance sales of popular items like Samba and Gazelle shoes and strengthen his ties with retailers. He also decided to resume selling Yeezy trainers in order to clear off remaining stock. Since he came control, Adidas shares have recovered, beating those of Nike and Puma.
"Although by far not good enough, 2023 ended better than what I had expected at the beginning of the year," Gulden said.
As of 11:15 GMT, shares of Adidas were trading unchanged.
Adidas projects that sales in North America will decline by about 5% this year, indicating that the region will remain weak.
Sportswear and apparel firms have been negatively impacted by lower demand and overstocked retailers in the United States. Adidas reported that sales in North America decreased by 16% over the course of the year and by 21% in the fourth quarter.
Overall, according to Gulden, Adidas was able to reduce stocks by 24% in 2023, saving 1.5 billion euros, thanks to the clearance of merchandise through its outlet outlets.
Due to the Red Sea crisis, Adidas has reported supply delays of two to three weeks. Chief Financial Officer Harm Ohlmeyer stated on Wednesday that if the interruptions persist, working capital may be impacted.
Adidas is taking a chance on its ability to reclaim market share from competitors despite a general downturn in consumer demand for sportswear, which has led to job losses at Nike.
Adidas anticipates bettering its core business in 2024, with growth of at least 10% in the second half, excluding Yeezy.
Benefiting from the popularity of low-rise suede 'terrace' trainers like the Samba and Gazelle, it increased production last year. In the fourth quarter, footwear sales increased by 8% thanks to this trend, while garment sales decreased by 13%.
"Things have clearly been going in the right direction at Adidas since Bjorn Gulden took over," said Thomas Joekel, portfolio manager at Union Investment. "Brand heat is increasing, which can also be seen from the fact that fewer products now have to be sold at a discount."
Adidas anticipates a more robust comeback in China, where sales will expand at a double-digit rate following an 8% rise in 2023.
Adidas said it will sell the sneakers "at least at cost" last month, setting low expectations for the remaining Yeezy merchandise. Its most recent release was released on February 26, although it's hard to gauge how popular the sneakers will be.
Despite the firm managing the sales efficiently thus far, Cristina Fernandez, analyst at Telsey Advisory Group, stated that the Yeezy sales are "still a little bit of a wild card."
Adidas generated a profit of 300 million euros from the sale of Yeezy last year, bringing in 750 million euros. The business allocated 140 million euros to organisations that combat racism and antisemitism.
Adidas' board has decided to keep the dividend at 0.70 euros ($0.7650) per share for 2023, even though the company had its first financial loss since 1992.
(Source:www.thedailystar.net)
