BERLIN (dpa-AFX) - Sportswear maker adidas AG (ADDYY.PK) reported that its preliminary currency-neutral revenues for 2023 were flat versus the prior year-level despite the drag from the devaluation of the Argentine Peso in the fourth quarter. Previously, it was expected to decline at a low-single-digit rate.
In reported terms, sales declined 5% year-over-year to 21.43 billion euros in 2023. Reported revenues included the negative translation impact of more than 1.00 billion euros from unfavorable currency movements, which are expected to remain a drag on the company's top-line development in 2024.
adidas noted that the sales development in 2023 was impacted by significantly reduced sell-in to the wholesale channel as part of the company's successful initiatives to reduce high inventory levels. In addition, the discontinuation of the Yeezy business had a negative effect on the top-line development during the year. This represented a drag of around 500 million euros on the year-over-year comparison. The two Yeezy drops positively impacted net sales in an amount of around 750 million euros in 2023. This compares to a total of more than 1.20 billion euros of Yeezy revenues in 2022.
Excluding the Yeezy revenues in both years, currency-neutral revenues were up 2% in 2023.
adidas reported an operating profit of 268 million euros in 2023 compared to 669 million euros in 2022. According to its latest guidance the company was expecting an operating loss of 100 million euros. The outperformance was driven by a better-than-expected operational business in the fourth quarter and the company's decision not to write off the vast majority of its existing Yeezy inventory, the company said.
The latest outlook still included a potential write-off of its remaining Yeezy inventory in an amount of around 300 million euros. Following the latest decision, the 2023 operating profit now only includes a low double-digit million amount of Yeezy-related inventory write-offs. Instead, the company plans to sell the remaining Yeezy product at least at cost in 2024.
The company's underlying operating profit reached around 200 million euros in 2023, compared to the latest guidance of around 100 million euros.
For 2024, the company expects currency-neutral sales to grow at a mid-single-digit rate. The guidance assumes that the company will sell the remaining Yeezy inventory at cost, which would result in sales of around 250 million euros in 2024. Excluding the Yeezy revenues in both years, the guidance reflects currency-neutral growth at a high-single-digit rate in the underlying adidas business.
Adidas expects to generate an operating profit of around 500 million euros in 2024.
For more earnings news, earnings calendar, and earnings for stocks, visit rttnews.com
Copyright(c) 2024 RTTNews.com. All Rights Reserved
Copyright RTT News/dpa-AFX
© 2024 AFX News
