After releasing preliminary results in January, on March 13, German sportswear manufacturer adidas published its full annual report for the fiscal year 2023. Due to a conservative sell-in strategy to distributors, a focus on full-price business, and a decline in Yeezy sales, net sales dropped by 4.8% to €21.427 billion. Excluding currency impacts, sales were flat compared to the previous year, significantly exceeding initial expectations.
Group CEO Bjørn Gulden stated: “Although by far not good enough, 2023 ended better than what I had expected at the beginning of the year. Despite losing a lot of Yeezy revenue and a very conservative sell-in strategy, we managed to have flat revenues. We expected to have a substantial negative operating result, but achieved an operating profit of € 268 million. With a very disciplined go-to-market and buying process, we reduced our inventories by almost € 1.5 billion. With the exception of the US, we now have healthy inventories everywhere.”
“Maybe more important than the short-term financial KPIs are the improvements we achieved with the consumers and the retailers. We have launched and scaled some of the most popular footwear models in the market. Samba, Gazelle, Spezial, and Campus are selling very well and are also growing in all global web searches. We will continue to keep the momentum on these models, but also heat up and scale models like SL 72 and Superstar and launch new models in the lo profile and running lifestyle segment. We feel we are in a very good position to grow in the footwear lifestyle segment and expect this to also have a very positive effect on lifestyle apparel, especially collections with our famous Three Stripes.“
After the financial report was released, by the close of March 13, the group’s share price had risen by 3.8% from the previous trading day, with its share price increasing by 37% over the past 12 months, bringing its current market value to approximately €35.728 billion.
Over the past year, adidas has continued to invest in brick-and-mortar stores and digitalization: investing in new or renovated owned retail or franchise stores, as well as displaying adidas products in small specialty stores, almost accounting for half of the total investment, with the remainder primarily in IT and logistics.
In terms of the market, the company expects its key Chinese market to maintain its recovery momentum this year, which will boost adidas’s performance amidst a slowdown in the US economy. After currency adjustments, annual sales in Greater China grew by 8% year-on-year. Bjørn Gulden said, “Compared to 12 months ago, we feel much more confident about the Chinese market,” adding that China’s growth potential is “far higher than” the growth achieved in the full year of 2023.
| Source: Official financial report, Financial Times
| Image Credit: Group official website
| Editor: Wang Jiaqi
