FX.co ★ Adidas Q2 Preliminary Operating Profit Rises; Lifts FY Outlook

Adidas AG (ADDYY.PK), the renowned sportswear manufacturer, announced its preliminary operating profit for the second quarter, reaching 346 million euros, a significant increase from 176 million euros recorded in the same period last year. This recent quarter's performance included a contribution of approximately 50 million euros from the partial sale of remaining Yeezy inventory.

Quarterly revenues, measured on a currency-neutral basis, rose by 11% year-over-year. When expressed in euros, quarterly revenues climbed 9%, amounting to 5.822 billion euros compared to 5.343 billion euros in the prior year. Excluding Yeezy sales from both years, currency-neutral revenues surged by 16% in the quarter.

Owing to its robust performance in the second quarter and sustained positive momentum, Adidas has revised its full-year guidance upwards. The company now forecasts a high-single-digit increase in currency-neutral revenues for 2024, an improvement from the previous mid- to high-single-digit growth expectation.

Additionally, Adidas projects its annual operating profit to reach around 1.0 billion euros, an upgrade from the earlier estimate of approximately 700 million euros.

The updated guidance assumes that the remaining Yeezy inventory will be sold at cost throughout the year, contributing an additional 150 million euros in sales without further profit impact.

However, Adidas continues to anticipate significant adverse effects from currency fluctuations, which are expected to negatively impact both reported revenues and gross margin development in 2024. These unfavorable currency effects were particularly prominent during the first half of the year, affecting the company's profitability.