Adidas AG, the renowned German sportswear company, reported a reduced net loss in its fourth quarter, amidst a period of softer revenues. For the first time in thirty years, the company experienced a loss in the fiscal year of 2023, primarily as a result of the Yeezy impact. However, the brand has declared a constant dividend and anticipates an improved operating profit and sales in the fiscal year of 2024 although predicting weaker currency-neutral sales in North America.
In the morning trading in Germany, Adidas shares dropped approximately four percent, marking a challenging start of the day for the company.
Adidas CEO, Bjorn Gulden, reflected on the year, saying, "Despite losing significant Yeezy revenue and a very careful selling strategy, we managed to maintain stable revenues. We expected to have a substantial negative operating result, but achieved an operating profit of €268 million. With the exception of the US, our inventories are healthy everywhere."
Also, Adidas approved the Executive and Supervisory Boards' recommendation to provide a steady dividend of €0.70 per dividend-entitled share to shareholders at the upcoming annual general meeting on May 16.
Moving forward, Adidas anticipates a significant profit of around €500 million in the fiscal year of 2024. This figure is almost double the operating profit of €268 million from 2023.
Adidas predicts a mid-single-digit growth rate for currency-neutral sales in 2024. An important factor to consider here is that Adidas plans to sell the remaining Yeezy inventory at cost.
If we exclude Yeezy revenues, the forecasts reflect currency-neutral growth at an impressively high single-digit rate in the company's primary business.
In terms of country-specific performance, Adidas expects to witness growth in all markets except North America, where the company predicts a decrease in currency-neutral sales at a mid-single-digit rate in 2024.
Adidas anticipates the strong growth surge starting from the first quarter, and becoming even stronger in the latter half of the year.
Compared to the previous year's €512 million, the net loss attributable to shareholders has come down to €379 million in the fourth quarter.
The net loss from the continuing operations amounted to €401 million which is notably less than the last year's loss of €482 million.
The company reported an operating loss of €377 million, which is quite less than the previous year's operating loss of €724 million.
Revenues fell by 8% to settle down at €4.81 billion which is less than last year's €5.21 billion. Similarly, currency-neutral revenues in the fourth quarter also fell by 2%.
Despite the considerable Yeezy influence, currency-neutral footwear sales grew by 8% in the fourth quarter, thanks to the solid double-digit growth in Originals and Skateboarding.
Revenue from apparel dipped 13%, mainly because of the significant reduction in Football sales due to intense jersey sales in the previous year's quarter because of the FIFA World Cup 2022.
Accessories sales slightly went down by 1%, predominantly due to the comparison challenge with the buoyant sales period of the previous year due to the FIFA World Cup in 2022.
Notably, revenues in DTC concept stores rose significantly in the double digits, and the full-price Adidas sales on its own e-commerce platforms skyrocketed by 40%.
However, Adidas shares in Germany were trading at €185.72, down by 3.64 percent.
