The company’s gross margin showed improvement in Q2 FY23, up 0.6 percentage points to 50.9 per cent, compared to 50.3 per cent in Q2 FY22. However, operating profit took a significant hit, plummeting to €176 million from €392 million in 2022. This equated to an operating margin of 3.3 per cent, down from 7 per cent the previous year.
German sportswear giant Adidas reported Q2 FY23 revenues of €5.343 billion, down 5 per cent YoY.
Gross margin improved to 50.9 per cent, while operating profit dropped to €176 million.
Q2 results were buoyed by Yeezy inventory sale.
In FY23, the company expects a mid-single-digit revenue decline and breakeven operating profit, excluding one-offs.
The results from Q2 were positively affected by the first sale of some of the company’s Yeezy inventory, as announced at the end of May. In addition, the underlying Adidas business also fared slightly better than anticipated, the company said in a press release.
Following the results, Adidas updated its full year guidance. The company now projects a mid-single-digit rate decline in currency-neutral revenues for FY23, an improvement from the previously forecast high-single-digit rate decline. The company’s underlying operating profit, excluding any one-offs related to Yeezy and the ongoing strategic review, is still predicted to break even.
However, including the positive impact from the first Yeezy drop, a potential write-off of the now €400 million remaining Yeezy inventory (down from previously €500 million), and one-off costs related to the strategic review of up to €200 million, Adidas now anticipates an operating loss of €450 million for 2023, improved from the previously predicted loss of €700 million.
Fibre2Fashion News Desk (DP)
