How Yeezy Saved Adidas: Exceeding Profits Amidst Decline
ADIDAS 
Adidas, the renowned sportswear manufacturer, has exceeded market expectations by reporting strong sales and operating profits for the year 2023. The company’s decision to resume selling Yeezy merchandise played a pivotal role in this achievement. Despite a 5 percent decline in sales to 21.4 billion euros in reported terms, the company’s currency-neutral revenues remained flat, surpassing its own projections of a low-single-digit decline. This resilience in the face of challenges was primarily attributed to the successful reintroduction of Yeezy products.
The resumption of Yeezy sales significantly contributed to lifting net sales by 750 million euros in 2023, compared to over 1.2 billion euros in Yeezy revenues in 2022. The operating profit of 268 million euros also exceeded the company’s expectations, as it had initially anticipated an operating loss of 100 million euros. This remarkable turnaround was further underscored by the fact that Yeezy profits represented about 300 million euros in 2023. The company’s CEO, Bjørn Gulden, emphasized that the decision not to write off most of the Yeezy inventory was a crucial factor in this improvement.
In addition to the positive performance in 2023, Adidas has set ambitious targets for 2024. The company expects mid-single-digit growth in currency-neutral sales in 2024, with a focus on rebuilding the brand for double-digit growth. It anticipates operating profits of 500 million euros, reflecting a confident outlook for the year ahead. The positive momentum from 2023 has positioned Adidas well for the future, underlining its commitment to sustained growth and profitability.
The Impact of Yeezy Sales on Adidas’ Financial Performance
Adidas’ financial performance for 2023 was significantly impacted by the decision to continue selling Yeezy merchandise. The company’s sales for the year decreased by 5 percent to 21.4 billion euros in reported terms, influenced by currency effects and reduced wholesale sales. However, the decision to reintroduce Yeezy products proved to be a strategic move, contributing to a substantial increase in net sales and operating profits.
The positive impact of Yeezy sales was evident as it lifted net sales by 750 million euros in 2023, compared to over 1.2 billion euros in Yeezy revenues in 2022. Moreover, the operating profit of 268 million euros surpassed the expected operating loss of 100 million euros, underscoring the significant contribution of Yeezy merchandise to Adidas’ financial performance. CEO Bjørn Gulden emphasized that the company’s research indicated the potential to sell the remaining Yeezy inventory in 2024 for at least the cost price, highlighting the strategic value of this decision.
Looking ahead to 2024, Adidas anticipates the sale of the remaining Yeezy inventory at cost, expected to result in around 250 million euros worth of sales. This forward-looking approach demonstrates the company’s commitment to leveraging the remaining Yeezy inventory to drive sales and optimize its financial performance. The strategic focus on rebuilding the brand for double-digit growth in the coming year further underscores Adidas’ confidence in the positive impact of Yeezy sales on its future financial outlook.
Adidas’ Forward-Looking Strategy for 2024
Adidas has outlined a forward-looking strategy for 2024, aiming to build on the positive momentum from 2023 and achieve sustained growth and profitability. Despite the 5 percent decline in sales to 21.4 billion euros in reported terms in 2023, the company’s currency-neutral revenues remained flat, surpassing its expectations of a low-single-digit decline. This resilience has positioned Adidas for a promising 2024, with a focus on mid-single-digit growth in currency-neutral sales and a commitment to rebuilding the brand for double-digit growth.
The decision to resume selling Yeezy merchandise has been a key driver of Adidas’ positive performance. The company anticipates the sale of the remaining Yeezy inventory at cost in 2024, which is expected to result in around 250 million euros worth of sales. This strategic move underscores Adidas’ proactive approach to leveraging its remaining Yeezy inventory to drive sales and optimize its financial performance. CEO Bjørn Gulden’s emphasis on the company’s commitment to rebuilding the brand for double-digit growth further reflects the strategic importance of Yeezy sales in Adidas’ forward-looking strategy.
Amidst the positive outlook for 2024, CEO Bjørn Gulden offered a conservative perspective, acknowledging that the company’s financial performance in 2023 was not optimal. However, he highlighted the positive shift in the company’s attitude and agility, signaling a return to the core values that define the Adidas brand. This renewed focus on the company’s DNA and the commitment to rebuilding the brand for sustained growth underscore Adidas’ proactive and strategic approach to maximizing its financial performance in the coming year.
The information provided in this article is for general informational purposes only and should not be considered as financial advice.