2023-07-24 19:05:26
Coveted sports shoes
Kanye West’s Yeezy collection was also highly coveted in the clearance sale.
(Photo: imago/Eastnews)
Munich After a first successful sale of “Yeezy” goods from the stopped cooperation with US scandal rapper Kanye West, Adidas has slightly raised its forecasts. Adidas announced on Monday evening that sales in the current year are only expected to fall in the mid-single-digit percentage range.
So far, the Dax group had assumed a drop in the high single digits. The operating loss is also likely to be lower than initially feared.
Adidas ended its collaboration with the music artist last year after West’s anti-Semitic statements and other incidents. This means that the second largest sporting goods company in the world is losing an important source of revenue. In addition, “Yeezy” goods with a sales value of more than one billion euros remained in the warehouses.
After a long period of deliberation, the new CEO Björn Gulden decided to gradually sell the remaining goods. Part of the proceeds will be donated. A first sales campaign at the end of May/beginning of June met with great demand.
According to information from the “Financial Times” (FT), around four million pairs of shoes worth 508 million euros were ordered. However, actual sales were lower because Adidas was unable to meet the demand for certain models in some sizes.
Adidas did not give any specific figures, but the quarterly results were positively influenced by the sell-off. The other Adidas stores also developed slightly better than expected. Currency-adjusted group sales stagnated in the second quarter at EUR 5.3 billion. In euros, that meant a minus of five percent.
The operating result fell from 392 to 176 million euros. The share went up around 1.2 percent from the Frankfurt stock exchange on Monday and was at the top of the Dax for a while.
Depreciation is also lower
Since Adidas is now at least partially selling the “Yeezy” shoes, the inventory does not have to be written off as much as expected. All in all, the group now expects an operating loss of 450 million euros for the year as a whole – the previous forecast was minus 700 million euros. “Should potential future Yeezy sales prove successful, it would further enhance the company’s business results,” the statement said.
“Yeezy” had been a bestseller since they began working with West. In good times, sales were well over a billion euros a year, with high margins. However, Gulden made it clear that Adidas did not want to make big profits with the sale.
According to FT, the company wants to use the proceeds from the sale to pay the royalties due to the musicians, who now call themselves Ye, and to cover the costs associated with the end of the cooperation.
Gulden puts trade first again
Ex-Puma boss Gulden took over the management of Adidas at the turn of the year. Predecessor Kasper Rorsted had to go after several profit warnings. So far, the mood has improved above all under Gulden. Rorsted was said to have a rather gruff leadership style.
The Norwegian guilder wants to take Adidas back to its roots: athletes and athletic performance should be the focus again, including brand management, not permanent margin optimization. In addition, Gulden is once again putting trade first, while Rorsted primarily wanted to expand the higher-margin online trade.
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There is still no clear guilder effect in the figures, the business cannot be turned around that quickly. The products that are now coming onto the market were developed under Rorsted. But it is said in corporate circles that you can see the first positive signs. The sales team is highly motivated again, and the new CEO also wants to serve fringe sports more intensively again.
However, Adidas is likely to develop worse again this year than its smaller rival Puma. For the current year, this has so far announced an increase in sales in the high single-digit percentage range. On Wednesday, Puma, number three in the world market behind Nike and Adidas, will present its figures for the second quarter.
Date of initial publication: 24.7., 07:32
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