Adidas (OTC:) raised its full-year guidance on Tuesday after a strong performance in the second quarter of 2024.
The sportswear giant reported currency-neutral revenues increased 11% year-over-year, with euro-denominated revenues up 9% to €5.822 billion, up from €5.343 billion in 2023. Excluding Yeezy sales, currency-neutral revenues saw an impressive 16% growth.
The company’s gross profit margin in the second quarter was 50.8%, down slightly from 50.9% a year earlier. However, Adidas’ underlying gross profit margin improved significantly, driven by better sell-through rates, reduced discounting, lower sourcing costs, and a more favorable category mix.
“The significantly smaller Yeezy business had a negative impact on the year-over-year comparison,” Adidas said.
Adidas’ operating profit in the second quarter rose to €346 million, nearly double the €176 million recorded in the same period last year. This figure includes a contribution of about €50 million from the sale of parts of the remaining Yeezy inventory.
Given the better-than-expected performance and current momentum, adidas has updated its full-year guidance. The company now expects currency-neutral revenue to grow at a high single-digit rate, up from a previous forecast of a mid-to-high single-digit rate.
In addition, adidas expects its operating profit to reach around EUR 1.0 billion, a significant increase from the previous forecast of around EUR 700 million.
Adidas’ revised guidance assumes the sale of remaining Yeezy inventory at cost, which is expected to generate additional sales of approximately €150 million without additional earnings contribution.
Despite these positive adjustments, the company still expects significant negative currency impacts on profitability, especially during the first half of the year.
Following the earnings announcement, shares of rival Nike rose, currently trading about 1.7% higher.
However, Nike reported revenue of $12.6 billion in June, missing the consensus estimate of $12.89 billion, and the company also forecast a surprise decline in fiscal 2025 revenue as demand for newer brands takes a hit.
Nike shares are down more than 32.5% this year.
