Adidas Raises Annual Profit Bar After Yeezy Brand Aids Profit — Update
By David Sachs
Adidas raised its revenue and profit expectations after the controversial Yeezy brand contributed to a better-than-anticipated first quarter.
The German shoe and sports apparel company said Tuesday that it now expects operating profit to finish the year at around 700 million euros ($743.7 million) compared with its previous forecast of EUR500 million.
After terminating its contract with Yeezy namesake Kanye West last year, the company decided to sell the inventory rather than write it off. Adidas's release of Yeezy apparel generated revenue of about EUR150 million and an operating profit of around EUR50 million in the first quarter, the company said. Its remaining inventory will be sold at cost, contributing to revenue but not profit, the company said.
Adidas's upgrade came after first-quarter revenue rose 4% on year to EUR5.46 billion, above a Visible Alpha consensus of 3.1%. Its gross margin improved to 51% from 45% a year prior, while operating profit jumped to EUR336 million from EUR60 million.
Revenue adjusted for currency effects is now expected to grow at a rate in the mid-to-high single digits compared with previous expectations of mid-single-digit growth, the sportswear giant said.
Despite the results, Adidas still expects currency-exchange effects to constrain profitability, revenue and gross margin this year, it said.
Write to David Sachs at david.sachs@wsj.com
(END) Dow Jones Newswires
April 16, 2024 12:36 ET (16:36 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.-
These Stocks Are (Still) Powering the Bull Market
-
5 Undervalued Energy Stocks to Play the AI Data Center Demand Boom
-
After Earnings, Is Lowe’s Stock a Buy, Sell, or Fairly Valued?
-
5 Stocks With the Largest Fair Value Estimate Cuts After Q1 Earnings
-
10 Stocks With the Largest Fair Value Estimate Increases After Q1 Earnings
-
Markets Brief: Inflation Back in the Spotlight
-
AI Is Booming, but Consumer Spending Is Slowing. Which Will Prevail in the Stock Market?
-
What’s Happening In the Markets This Week
-
3 Dividend Stocks for June 2024
-
After Earnings, Is Alibaba Stock a Buy, Sell, or Fairly Valued?
-
MongoDB Earnings: Slashing Valuation as Execution and Macro to Blame for Lower Guidance
-
Marvell Earnings: We Raise Our Medium-Term AI Forecast and Bring Our Valuation Up to $75
-
Zscaler Earnings: Impressive Traction in Emerging Products Drives Sales Growth for the Quarter
-
Dell Earnings: Raising Valuation on Strong AI, but the Stock Remains Severely Overvalued
-
After Earnings, Is Nvidia Stock a Buy, Sell, or Fairly Valued?
-
The 10 Best Companies to Invest in Now