Germany's Adidas reports 10% growth, $508.4 mn net income in Q3 2024

The company’s gross margin increased 2.0 percentage points to 51.3 per cent during Q3 2024 vs 49.3 per cent in Q3 2023. The company’s apparel sales were up 5 per cent year-over-year (YoY), mainly driven by strong double-digit growth in football. Accessories returned to growth and increased 10 per cent during the Q3 2024, as per a press release by Adidas.

The company’s footwear revenues increased 14 per cent on a currency-neutral basis during the Q3 of 2024, led by strong double-digit growth in originals. In addition, double-digit growth in sportswear as well as increases in performance categories, including football, running, training, golf and specialist sports, contributed to the broad-based growth in footwear.

The strong demand for Adidas products was evident across channels. Wholesale grew 13 per cent on a currency-neutral basis during the third quarter in 2024. Direct-to-consumer (DTC) revenues grew 7 per cent during the quarter versus the prior year’s same quarter. Excluding Yeezy, the company’s DTC business grew 17 per cent. Within DTC, Adidas’ own retail stores posted double-digit growth, driven by the strong sell-out in the company’s concept store fleet, which accelerated further compared to the first half of the year, the press release said.

Currency-neutral sales in Europe increased 18 per cent during the Q3 of 2024. Revenues in emerging markets and Latin America were up 16 per cent and 28 per cent YoY, respectively, while sales in Japan/South Korea increased 18 per cent. Revenues in Greater China grew 9 per cent in Q3 2024 YoY. In North America, sales decreased 7 per cent YoY.

First nine months (9M) 2024 performance

In the first nine months of 2024, currency-neutral revenues increased 10 per cent compared to the prior-year period. In euro terms, revenues were up 7 per cent to €17.718 billion (2023: €16.616 billion) as currency developments led to an unfavourable translation impact. The company’s gross margin increased 2.7 percentage points to 51.1 per cent YoY (2023: 48.4 per cent) during the first nine months of the year.

The company’s operating profit amounted to €1.280 billion in 9M period (2023: €646 million), reflecting an operating margin of 7.2 per cent YoY (2023: 3.9 per cent). The net income of the company from continuing operations increased significantly to €851 million (2023: €343 million), with basic earnings per share from continuing operations increasing to €4.50 (2023: €1.69). The minor difference to diluted earnings per share from continuing operations of €4.49 (2023: €1.69) is attributable to the company’s employee stock purchase programme, added the release.

Adidas chief executive officer (CEO) Bjørn Gulden said: “The third quarter was a very strong quarter for us and again better than expected. 14 per cent underlying growth for the adidas brand, a very healthy gross margin above 51 per cent and an operating profit of €598 million are numbers that we are very happy with and a proof that we are moving in the right direction. I am especially proud that we are growing in all regions, in all channels and now also in all product divisions.”

In its full-year outlook, Adidas stated that it expects currency-neutral revenues to increase at a rate of around 10 per cent in 2024 (previously: to increase at a high-single-digit rate). The company’s operating profit is now expected to reach a level of around €1.2 billion (~$1.3 billion) which was previously estimated to reach a level of around €1.0 billion. Adidas assumes the sale of the remaining Yeezy inventory during the remainder of the year to occur on average at cost. This would result in additional revenues of around €50 million and no further profit contribution in the fourth quarter of 2024.

Fibre2Fashion News Desk (SG)