After the waves of Adidas Yeezy releases from August and November 2023, the company is announcing a new wave of releases during 2024.
Today Adidas published its preliminary results for 2023. Based on these results, Adidas sales in 2023 were 5% lower than in 2022 (€21.427 billion vs €22.511 billion). Among the reasons for the revenue decline is the discontinuation of the Adidas Yeezy product line. The shortfall caused by the Yeezy line is estimated at €500 million. The two Yeezy releases in August and November 2023 generated revenue of approximately €750 million, a low figure compared to the €1.2 billion recorded in 2022. Excluding the Yeezy product line, the Adidas brand is up 2% compared to the 2022 results.
Not only the company’s revenue was affected last year. Profit fell to 268 million euros, 60% lower than in 2022 (669 million euros). According to internal documents, Adidas was expecting a loss of 100 million euros, so the results achieved are satisfactory. These results were also due to the decision not to write off the remaining Yeezy stock as a loss, with Adidas announcing that it plans to sell the stock at at least its purchase price.
Bjørn Gulden, CEO of Adidas, issued the following press release on January 31, 2024 regarding Adidas’ 2023 revenues.
“Our fourth quarter developed a little better than expected and we have decided to release preliminary numbers. For the full year our currency-neutral revenues were flat, and we reached an operating profit of € 268 million. This is € 368 million better than what we guided for. The improvement is due to the better operating business of around € 100 million and the decision to not write off € 268 million of Yeezy inventory. Our consumer, retail and trade research has shown that we can sell this remaining inventory in 2024 for at least the cost price. This is why we have only written off inventory that was either damaged or very broken in sizes.
We continue to feel we have improved our presence in front of the consumer, we have better products in the market with improved sell-throughs, we have increased our visibility by investing again in more teams and athletes, we have successfully launched our new Originals campaign, we feel we have improved our relationship with retail partners and we have reduced our inventories substantially.
We do of course know that our financial performance is not good. But we are on the way of making adidas a good company again. As we said from the beginning, we just need the time to solidly build it up again. I feel that the attitude and agility in our teams are back and that we are showing the old adidas DNA again.
For 2024, we expect sales to start flattish, but to then improve every quarter. We expect the underlying adidas business (excluding Yeezy) to grow in the high-single-digits for the full year and to be up at least 10% in H2. Despite no assumed profit contribution from Yeezy, the strong unfavorable currency effects, the ongoing challenges in North America, our continued investment in both marketing and sales and a world full of uncertainties, we expect an operating profit of around € 500 million in 2024. This year is the next building block needed to bring adidas back to be a company with double-digit growth and 10% operating margin.”
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Vlad Ciutacu is a writer based in The Hague, Netherlands. He has been working in the footwear industry for more than a decade, with hundreds of pairs in his collection. His favourite models are the Air Jordan 1 and the Nike SB Dunk Low Pro. Find him on Facebook, Twitter, and Instagram.
