Adidas reports flat sales as market remains ‘volatile’

Adidas reported an operating profit of €176m (£151.9m) in the second quarter of the year, down from €392m (£338.4m) the business reported at the same time in 2022.

The global sportswear giant said profits took a hit due to “extraordinary expenses of around €160m (£138.1m) related to the one-off costs related to the strategic review as well as the donations and accruals for further donations”. 

The sale of Yeezys had a positive impact of €150m (£129.5m) on Adidas’ operating profits in the quarter, generating a revenue of €400m (£345.3m) for the company after the initial product drop in June.  

Total sales remained flat at €5.34bn (£4.61bn) in currency-neutral terms; however, in euro terms, sales saw a 3% decline compared to sales of €5.59bn (£4.83bn) the business reported in 2022.  

The sportswear giant said it expects currency-neutral revenues to decline at a mid-single-digit rate in 2023 as it accounts for macroeconomic challenges and geopolitical tensions, including elevated recession risks in North America and Europe as well as uncertainty around the recovery in Greater China. 

The company was previously expecting a revenue decline at a “high-single-digit rate”, but changed its guidance on July 24 after the “positive impact of the first sale of some of its Yeezys inventory and a slightly better-than-expected development of the Adidas business in the first half of the year”. 

Adidas chief executive Bjørn Gulden said: “The market is still very volatile, and we continue to see a lot of uncertainty for the rest of the year. As there is still a lot of inventory in the market, retailers are very cautious in their pre-orders.

“Our story is the same as we said at the beginning of the year: We are using 2023 to clean inventories, work on future products, improve the way we work, build better partnerships, and lay the foundation for a better 2024 and a good and profitable Adidas in 2025 and 2026. 2023 is not about trying to show short-term results. 

“We will continue to carefully sell off more of the existing Yeezy inventory. This is much better than destroying and writing off the inventory and allows us to make substantial donations to organizations like the Anti-Defamation League, the Philonise & Keeta Floyd Institute for Social Change and Robert Kraft’s Foundation to Combat Antisemitism. And it is of course also helping both our cash flow and general financial strength.”