Adidas records strong Q2 results, raises full year guidance

In the second quarter of 2024, currency-neutral revenues at Adidas increased 11 percent reflecting 16 percent growth in Adidas business. In euro terms, revenues grew 9 percent to 5.8 billion euros.

Raising its outlook after strong second quarter performance, the company said, it now expects currency-neutral revenues to increase at a high-single-digit rate in 2024 and operating profit is now expected to reach around 1 billion euros.

Commenting on the quarterly financial update, Adidas CEO Bjørn Gulden said in a statement: “Given the improved business in Q2 we continue to raise our expectations and are now guiding for a full-year revenue increase in the high single digits and an operating profit of around 1 billion euros. Our mid-term EBIT margin target of 10 percent is achievable despite external challenges.”

Adidas posts growth across product categories in Q2

The company’s footwear revenues increased 17 percent on a currency-neutral basis during the quarter. Apparel sales were up 6 percent, driven by strong double-digit growth in football, while accessories declined 8 percent during the quarter.

On a currency-neutral basis, lifestyle revenues increased double digits during the quarter. Wholesale grew 17 percent on a currency-neutral basis and direct-to-consumer (DTC) revenues grew 4 percent versus the prior year. Excluding Yeezy, the company’s DTC business grew 21 percent.

Within DTC, growth in Adidas’ own retail stores accelerated 15 percent, while ecommerce revenues declined 6 percent in the quarter because of the significantly smaller Yeezy business. Excluding Yeezy, revenues in ecommerce were up more than 30 percent in Q2.

The company said currency-neutral sales in Europe increased 19 percent, while revenues in emerging markets and Latin America also grew 25 percent and 33 percent, respectively. Sales in Greater China grew 9 percent and revenues in Japan/South Korea were up 6 percent. Revenues in North America decreased 8 percent.

The company’s second quarter gross margin reached 50.8 percent, operating profit increased to 346 million euros, reflecting an operating margin of 5.9 percent. The company’s net income from continuing operations amounted to 211 million euros, while basic EPS increased to 1.09 euros.

Review of Adidas’ first half results

In the first half period, the company’s currency-neutral revenues increased 10 percent, while in euro terms, revenues were up 6 percent to 11.3 billion euros. The top-line development was driven by 10 percent currency-neutral growth in Adidas business. In addition, the sale of parts of the remaining Yeezy inventory contributed revenues of more than 350 million euros in total during the six-month period.

The company’s gross margin increased 3.2 percentage points to 51 percent during the first half of the year. The company’s operating profit amounted to 682 million euros, reflecting an operating margin of 6 percent.

Net income from continuing operations increased to 382 million euros, while basic and diluted earnings per share from continuing operations increased to 2.05 euros.

The company expects sale of the remaining Yeezy inventory during the remainder of the year to result in additional revenues of around 150 million euros and no further profit contribution during the second half of 2024.