Germany-based global sportswear company Adidas has reported a 11 per cent increase in preliminary currency-neutral revenues in the second quarter of fiscal 2024 (Q2 FY24). In euro terms, the company's revenues grew by 9 per cent, reaching €5.822 billion (approximately $6.39 billion), up from €5.343 billion in FY23. Excluding Yeezy sales from both years, currency-neutral revenues surged by 16 per cent during the quarter.

The company's gross margin stood at 50.8 per cent in Q2, slightly down from 50.9 per cent in FY23. However, the underlying Adidas gross margin showed significant improvement, driven by better sell-throughs, reduced discounting, lower sourcing costs, and a more favourable category mix. The year-over-year comparison was negatively impacted by the significantly smaller Yeezy business.

Adidas' operating profit for the second quarter rose to €346 million, up from €176 million in FY23. This increase includes a contribution of approximately €50 million from the sale of parts of the remaining Yeezy inventory, the company said in a press release.

Following the better-than-expected performance during the quarter and considering the current momentum, Adidas has raised its full-year guidance. The company now expects currency-neutral revenues to increase at a high-single-digit rate in FY24, up from the previous forecast of a mid- to high-single-digit rate increase. The company's operating profit is now projected to reach around €1 billion, significantly higher than the previous estimate of approximately €700 million.

The updated guidance assumes the sale of the remaining Yeezy inventory during the rest of the year, expected to occur on average at cost. This would result in additional sales of around €150 million without further profit contribution during the remainder of the year.

Fibre2Fashion News Desk (DP)