German sportswear giant Adidas has reported a 10 per cent increase in currency-neutral revenues compared to the prior-year period the first half of fiscal 2024 (H1 FY24). In euro terms, revenues rose by 6 per cent to €11.280 billion (approximately $12.19 billion), compared to €10.617 billion in H1 FY23, as currency developments led to an unfavourable translation impact.

The top-line growth was driven by the strong momentum of the underlying Adidas business, which grew 10 per cent on a currency-neutral basis. Additionally, the sale of parts of the remaining Yeezy inventory contributed more than €350 million to total revenues during the six-month period (around €400 million in H1 FY23), the company said in a media release.

The company’s gross margin improved significantly, increasing by 3.2 percentage points year-on-year (YoY) to 51.0 per cent. Operating profit increased to €682 million, reflecting an operating margin of 6 per cent (FY23: 2.2 per cent). The sale of Yeezy inventory contributed around €100 million to the operating profit in H1 FY24.

Other operating expenses increased by 3 per cent YoY to €5.115 billion, but as a percentage of sales, they decreased by 1.3 percentage points to 45.4 per cent. Marketing and point-of-sale expenses rose by 12 per cent to €1.363 billion.

Net income from continuing operations increased significantly to €382 million, while basic and diluted earnings per share from continuing operations increased to €2.05. Inventories decreased by 18 per cent to €4.544 billion as of June 30, 2024, reflecting a reduction of €1 billion compared to the prior-year level of €5.540 billion.

In the second quarter of fiscal 2024 (Q2 FY24), Adidas reported an 11 per cent increase in currency-neutral revenues compared to the prior year. The double-digit growth reflects the strong momentum of the underlying Adidas business, which grew by 16 per cent YoY. In euro terms, revenues grew by 9 per cent to €5.822 billion. The company’s second-quarter gross margin reached 50.8 per cent.

Other operating expenses increased by 2 per cent YoY to €2.637 billion. Operating profit amounted to €346 million, reflecting an operating margin of 5.9 per cent. Net income from continuing operations amounted to €211 million, while basic EPS from continuing operations increased to €1.09.

Footwear revenues increased by 17 per cent on a currency-neutral basis during the quarter. Apparel sales were up by 6 per cent, driven by strong double-digit growth in football, while accessories declined by 8 per cent. On a currency-neutral basis, lifestyle revenues increased by double digits, and performance also posted double-digit growth. Wholesale grew by 17 per cent on a currency-neutral basis, while direct-to-consumer (DTC) revenues grew by 4 per cent. E-commerce revenues declined by 6 per cent.

Currency-neutral sales in Europe increased by 19 per cent YoY during the quarter, while revenues in Emerging Markets and Latin America also grew by double digits (up 25 per cent and 33 per cent, respectively). Sales in Greater China grew by 9 per cent, and revenues in Japan and South Korea were up by 6 per cent. However, revenues in North America decreased by 8 per cent.

“Q2 was another quarter confirming that we are improving and on the way of again becoming a good and healthy company. The consumers are reacting positively to both our marketing and to our product launches. We see improved sentiment for the adidas brand globally and we continue to see improved sell-out numbers, both for lifestyle and performance products. New in the quarter was to see a positive development also for apparel,” said Adidas CEO Bjorn Gulden.

Fibre2Fashion News Desk (DP)