# Adidas shares leap on results but CEO warns of bumpy year Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-05-05 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Adidas CEO warns of bumpy year despite positive results Meta Description: Adidas reports better-than-expected quarterly results with an 8% share increase, but CEO warns of challenges ahead after ending Yeezy partnership. URL: https://financedigest.com/adidas-shares-leap-on-results-but-ceo-warns-of-bumpy-yearhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-05-05t063126z1lynxmpej44053rtroptp4adidas-kanyewest-1736814062035-compressed.jpg) # Adidas shares leap on results but CEO warns of bumpy year By Helen Reid LONDON (Reuters) -Adidas reported better-than-expected quarterly results and said the Chinese market was improving, sending its shares up 8%, although its chief executive warned the group still faces a “bumpy year with disappointing numbers”. The German sportswear giant is forecasting a loss this year after ending its Yeezy partnership with rapper Kanye West, who changed his name to Ye in 2021. Losing the highly [profitable Yeezy line hit sales in the quarter](https://www.financedigest.com/portugals-galp-quarterly-profit-up-62-below-market-forecast.html "Portugal’s Galp quarterly profit up 62%, below market forecast") by around 400 million euros, Adidas said, mainly denting revenue across North America, Greater China and EMEA. Adidas gave no update on what it plans to do with its stock of unsold Yeezy shoes, which Deutsche Bank analysts said was disappointing, even though the [quarterly results](https://www.financedigest.com/aon-reports-first-quarter-2018-results.html "Aon Reports First Quarter 2018 Results") represented reassuring early signs of recovery. CEO Bjorn Gulden told reporters Adidas has narrowed down the options for the shoes, and it is getting closer to a decision. Quarterly operating profit of 60 million euros ($66 million) [beat analyst expectations](https://www.financedigest.com/dollar-jumps-as-u-s-job-gains-wage-growth-beat-expectations.html "Dollar jumps as U.S. job gains, wage growth beat expectations") of 15 million euros. And although sales fell by 1%, this was also better than a forecast 4% drop, prompting an 8% rise in Adidas shares to their highest [level since](https://www.financedigest.com/optimism-levels-drop-to-low-of-17-percent-according-to-first-survey-since-banking-regulations.html "Optimism levels drop to low of -17 percent, according to first survey since banking regulations") August. Adidas stuck to its 2023 guidance, having warned of a 700 million [euro operating loss if it decides to completely write off the Yeezy stock](https://www.financedigest.com/stocks-under-pressure-as-euro-zone-inflation-hits-13-year-high.html "Stocks under pressure as euro zone inflation hits 13-year high"). North America was the worst hit by the loss of Yeezy, with currency-neutral [sales down 20% from last year](https://www.financedigest.com/e-prescribing-market-sales-revenue-to-substantially-surge-in-the-next-ten-years.html "E-Prescribing Market Sales Revenue to Substantially Surge in the Next Ten Years"). Gulden said partnerships with Bad Bunny, Pharrell Williams and Jerry Lorenzo’s Fear of God brand were helping Adidas connect with U.S. street culture. ## BRIGHTER SIGNS IN CHINA Sales in Greater China, a difficult region for Adidas, fell by 9%, but Gulden said there were signs of [improving performance in that market](https://www.financedigest.com/how-digital-marketing-images-can-help-improve-your-business.html "How Digital Marketing Images Can Help Improve Your Business"). The sell-through rate – or the share of [product held in inventory that went on to be sold – improved](https://www.financedigest.com/workplace-planning-software-cuts-costs-and-improves-employee-wellbeing-and-productivity-a-win-win-for-all.html "Workplace planning software cuts costs and improves employee wellbeing and productivity – a win-win for all") by 12% in the first quarter in Adidas’ own stores and wholesalers in China, meaning retailers are likely to order more in future. “For the first time… (in) the last two and a half years, we are actually optimistic that the numbers will turn from red to green,” said Gulden, who joined Adidas from local sportswear [rival Puma at the start of the year](https://www.financedigest.com/uber-rival-bolt-seeks-to-turn-profitable-next-year-ipo-in-2025.html "Uber rival Bolt seeks to turn profitable next year, IPO in 2025"). [Latin America](https://www.financedigest.com/new-office-expansion-enables-vaisala-to-accelerate-growth-in-industrial-and-environmental-measurements-businesses-professional-services-and-customer-support-the-new-office-will-cater-for-all-vaisala.html "New office expansion enables Vaisala to accelerate growth in industrial and environmental measurements businesses, professional services and customer support. The new office will cater for all Vaisala’s customers in the Latin America region.") was a bright spot, with sales up 49%. The “terrace” [shoe style is doing well in all markets](https://www.financedigest.com/football-shoes-market-globally-expected-to-drive-growth-through-2021-2031.html "Football Shoes Market Globally Expected to Drive Growth through 2021-2031"), and Adidas has started to make more Samba, Gazelle, and Campus shoes, Gulden said. Overall, [sales were 5.274 billion](https://www.financedigest.com/britain-chips-away-at-natwest-stake-with-1-6-billion-share-sale.html "Britain chips away at NatWest stake with .6 billion share sale") euros, down from 5.302 billion euros in the first quarter of 2022. Adidas’ gross margin fell to 44.8% due to the loss of Yeezy sales, higher [supply chain costs](https://www.financedigest.com/wind-turbine-maker-vestas-cuts-2021-outlook-on-supply-constraints-and-costs.html "Wind turbine maker Vestas cuts 2021 outlook on supply constraints and costs") and discounts. Inventories rose by 25% to 5.675 [billion euros](https://www.financedigest.com/mexicos-femsa-launches-second-3-billion-euro-sale-of-heineken-shares.html "Mexico’s FEMSA launches second 3 billion euro sale of Heineken shares") and Gulden said Adidas is working hard to “normalise” levels, which would allow it to discount less and boost the brand. ($1 = 0.9062 euros) (Reporting by Helen Reid; Editing by Himani Sarkar, Sherry Jacob-Phillips Alexander Smith and Keith Weir) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---