2024-02-16 15:00:40
February 16, 2024
Adidas shares fall according to forecast: weak outlook dampens mood
Adidas shares fell sharply after the company published a rather weak outlook for 2024. Analysts actually expected more. One of the reasons for the pessimistic forecasts: Adidas is still struggling with the consequences of its separation from Kanye West.
The company, in its preliminary full-year 2023 earnings report, forecast operating profit for 2024 to be approximately $540 million. This is well below analysts’ estimates, which were around US$1.37 billion. The reason for this is currency fluctuations in important markets.
The sportswear giant is trying to soften the blow by planning to sell its remaining inventory of Yeezy shoes, worth about $324 million, at cost instead of writing them off, which it expects to get about $270 million.
For 2023, the company reported an operating profit of $289 million – a significant decrease from $772 million in 2022, but a significant improvement from the previous forecast of a $108 million loss.
Pay
$1.08 billion – that’s the total revenue decline the company said it suffered in 2023 due to unfavorable currency fluctuations, including the “severe impact of the devaluation of the Argentine peso at the end of the year.” Adidas reported net sales of $23.1 billion in 2023.
To criticism
During the annual press conference, Björn Gulden, CEO of Adidas, described the cautious forecasts for 2024 as a “worst-case scenario” and said: “Everything we say is conservative.” Gulden added: “We try to be humble and down-to-earth and then it’s better to surprise positively than negatively.”
background
In 2022, Adidas joined several major brands and parted ways with Kanye West after the rapper made several anti-Semitic statements on social media and in interviews. West’s Yeezy-branded shoes were among Adidas’ most lucrative product lines, bringing the company around $1.3 billion in sales in 2022. The German sportswear giant had initially suggested it might be forced to write down its remaining Yeezy inventory, but the company sold them through its website and app, resulting in net sales of $810 million last year. The company said the termination of the partnership would reduce its 2023 revenue by $540 million. West lost his Forbes billionaire status after Adidas cut ties with the rapper. According to our estimates, his current net worth is $400 million.
Text: Siladitya Ray
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