By Andrea Figueras
Adidas reported a profit surge for the third quarter as the sportswear maker's recovery gains traction at a time when rival Nike has struggled to revive brand appeal.
The German sportswear company on Tuesday reported net profit of 443 million euros ($479 million) for the third quarter, around 71% higher than in the prior-year period. The figure surpassed analysts' prospects of 388.4 million euros, according to a poll of estimates compiled by Visible Alpha.
The company said its results got a boost from growing footwear sales, thanks to the popularity of its Samba, Spezial, Camus and Gazelle sneakers. Footwear sales jumped 14% on a currency-neutral basis, amid increasing competition from performance brands such as On and Hoka and recent comments from rivals about a muted consumer environment.
Adidas has been trying to revive the brand's momentum since chief executive Bjorn Gulden took the reins at the company in 2023.
The group has gone through a transition after ending a successful collaboration with rapper Kanye West, known as Ye. Parting ways with the rapper behind Yeezy-brand sneakers weighed on Adidas's financials.
The scrapped collaboration was behind the 8.3% decline in sales in North America in the quarter. Excluding Yeezy, revenue grew in the region from the year-earlier period. In the region that includes China, Taiwan and Hong Kong, revenue jumped 8.7%.
Overall, Adidas's sales were up 7.3% at 6.44 billion euros and operating profit jumped 46% to 598 million euros, in line with preliminary figures the company released earlier this month. Revenues rose 10% when excluding currency movements.
The company maintained its recently lifted guidance. The group expects operating profit for this year to be at around 1.2 billion euros and projects revenue to grow by around 10% at constant currency.
The upgraded outlook assumes that the remainder of Yeezy inventory would be sold on average at cost, resulting in about 50 million euros in extra sales and no contribution to profit.
The momentum for Adidas comes as its main rival Nike is contending with challenges. The U.S. athletic gear giant recently withdrew its guidance for the year ending in May and reported a decline in sales, after replacing its chief executive in September.
Analysts at RBC Capital Markets said in a note ahead of results that Adidas could maintain its sales momentum into the next year, since a lack of strategy and near-term product initiatives at Nike means its U.S. rival offers less competition.
Write to Andrea Figueras at andrea.figueras@wsj.com
(END) Dow Jones Newswires
October 29, 2024 04:27 ET (08:27 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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