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An Adidas flagship store is located on Nanjing Road Pedestrian Street in Shanghai, China.
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On Wednesday, Adidas disclosed a growth in fourth-quarter sales that surpassed market expectations, attributed largely to the sale of its remaining Yeezy inventory. However, the company has cautioned about slowing revenue growth anticipated for the upcoming year.
The German sportswear leader reported a revenue increase of 19% at constant currency rates, reaching 5.97 billion euros ($6.34 billion) over the quarter, exceeding the 5.72 billion euros predicted by analysts from LSEG.
Operating profit for the fourth quarter stood at 57 million euros, a significant recovery from a loss of 377 million euros in the same quarter a year previously.
Despite these positive results, shares dipped by 2.6% shortly after the stock market opened on Wednesday.
In terms of full-year performance, sales grew by 12% at constant currency rates to a total of 23.7 billion euros, slightly ahead of the 23.5 billion euros that had been anticipated. The company’s operating profit amounted to 1.34 billion euros, surpassing the forecast of 1.27 billion euros.
These results exceeded the company’s previous guidance, which had suggested a full-year revenue growth of about 10% at currency-neutral rates along with an operating profit of around 1.2 billion euros as outlined in their October report here.
CEO Bjorn Gulden commented on the positive outcomes, saying they were “much better than we had expected.” He acknowledged that while the company is not yet at its long-term goals, the year has affirmed the strength of the Adidas brand and the commitment of its teams. “We still have a lot to improve but I am very proud of what our people achieved in 2024,” he stated.
Looking forward to 2025, Adidas projects a rise in currency-neutral sales at a high-single-digit percentage and an increase in operating profit to between 1.7 billion euros and 1.8 billion euros.
“For 2025 we are in very good shape,” Gulden remarked, acknowledging ongoing macroeconomic uncertainties but expressing confidence in the company’s product lineup and local agility. “I cannot see why we should not be successful,” he added.
As part of its strategy, Adidas is working to expand its presence in North America, especially as Nike faces declining sales and as retailers aim to reduce dependence on a faltering Chinese market.
However, Adidas experienced a 1.6% decrease in North American sales at constant currency rates in 2024, struggling notably after discontinuing its once-popular Yeezy sneaker line. This decision followed the termination of its partnership with Ye, the rapper previously known as Kanye West, due to a series of anti-Semitic comments made by him in late 2022.
In its latest report, Adidas announced the successful sale of its remaining Yeezy stock during the fourth quarter.
Since taking over in January 2023, Gulden has been focusing on moving Adidas away from the financially troubled Yeezy line and towards revitalizing the brand.
Analyst Yanmei Tang from Third Bridge pointed out that the phasing out of the Yeezy brand and the lack of major sporting events may present challenges for the company in the near future. She emphasized the necessity for further innovation beyond popular models like the Samba and Gazelle to meet growth ambitions.
“While Adidas has regained some momentum in lifestyle footwear with its Terrace line (Samba, Gazelle, and Spezial), the peak of this trend may have already occurred in key markets such as Europe,” Tang noted in her insights on Tuesday.
“The brand is now shifting its focus to newer designs like the SL 72 and a potential comeback of the Superstar, but these efforts may not be enough to counterbalance the expected decline in the Terrace trend,” she indicated.
In recent quarters, Adidas has been closing the gap with its main competitor Nike, with Adidas’ market share rising to 8.9% in 2024, compared to Nike’s 14.1%, as reported by Globaldata cited by Reuters. Nevertheless, the landscape is becoming more competitive with the rise of newer brands like On, Hoka, and New Balance, all of which have been increasing their market presence over the past year.
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