Adidas bypasses the "intermediate phase" or "bridging period" in their strategy.
Adidas had initially planned to restructure in the current year, but two and a half months before the final balancing, it became apparent that the DAX company might incur losses during the holiday season, yet still meet its recently elevated projections. While market titan Nike is descending into turmoil, Adidas is witnessing double-digit growth rates and has upgraded its sales and earnings forecasts for the third time in six months. The company anticipates a 10% increase in sales in constant currency this year, as disclosed by Adidas in Herzogenaurach. The board had previously projected a maximum of 9%. The projected operating earnings are expected to reach 1.2 billion euros, 200 million more than anticipated.
To reach the new profit benchmark, Adidas might even tolerate losses in the fourth quarter. In the third quarter, sales grew by 10% in constant currency to 6.44 billion euros, and the operating result improved by 46% to 598 million euros. By the end of the ninth month, sales amounted to 17.7 billion euros and the operating result reached 1.28 billion euros. Initially, CEO Bjørn Gulden had referred to 2024 as a transitional year. He had only envisioned double-digit growth rates for the subsequent year at the beginning of the year. The target was to achieve an operating profit margin of 10% - if the strategy succeeds, it will be half as much this year.
Adidas is gaining from its retro-inspired models like "Samba" and "Gazelle", which are now popular for casual wear. Gulden has also rekindled the company's relationship with sports retailers, while his predecessor's focus had been on online business and company-owned stores. This strategy backfired for Nike CEO John Donahoe this year, resulting in his resignation. Retailers had allocated more space to new and trendy brands like "On" and "Hoka", making life difficult for Nike.
However, Adidas' figures are still influenced by the departure of controversial rapper and designer Kanye West ("Ye"). After being dismissed by Adidas following some controversies two years ago, sales of the last "Yeezy" shoe models designed by him skyrocketed, generating billions in sales for Adidas in good years. Without the "Yeezy" impact, Adidas' sales for the first nine months of 2024 would have risen by 14% compared to the previous year. The "clearance sale" this year added 50 million euros to the profits.
Adidas, being one of the Dax companies, managed to thrive despite challenges faced by other retail giants. Despite considering potential losses during the holiday season, Adidas companies still managed to meet their elevated projections and exceeded expectations with double-digit growth rates.
