Adidas shoes are displayed at a DSW store on January 31, 2024 in Novato, California.
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Adidas warned on Wednesday of a sales decline in its overcrowded North American market in 2024, as the German sportswear brand continues to sell off its remaining Yeezy inventory.
Currency-neutral sales in North America are expected to fall at a mid-single-digit rate in 2024, but are expected to post mid-single-digit growth worldwide despite persistent “macroeconomic challenges and geopolitical tensions,” he said the society.
Adidas confirmed its 2023 operating profit came in at 268 million euros ($292.9 million) based on stable currency-neutral sales, significantly above previous expectations as the company continues to endure tough hit by footwear retailer Yeezy’s discontinuation of its line. produced in collaboration with American rapper Ye, formerly known as Kanye West.
In the fourth quarter the company recorded an operating loss of 377 million euros. The board has proposed a fixed dividend of 0.70 euros per share.
“While by far not good enough, 2023 ended better than I expected at the start of the year,” CEO Bjørn Gulden said in a statement.
“Despite the loss of a lot of Yeezy revenues and a very conservative sales strategy, we managed to have stable revenues. We expected a substantially negative operating result, but we achieved an operating profit of 268 million euros.”
Adidas was confirming preliminary results released in late January, when it announced that it would not clear the majority of its Yeezy inventory and would instead sell the remaining shoes at cost.
The sportswear giant was forced to eliminate the Yeezy line after ending its partnership with Ye due to a series of anti-Semitic remarks the rapper made in 2022.
Adidas said the Yeezy discontinuation represented a drag of approximately 500 million euros in year-over-year comparisons through 2023, although the sale of portions of remaining inventory in the second and third quarters had a positive impact on net sales of approximately 750 million euros.
“With a very disciplined go-to-market and purchasing process, we have reduced our inventories by almost 1.5 billion euros. With the exception of the US, we now have healthy inventories everywhere,” Gulden said.
He added that the company expects some growth in the first quarter of 2024 and further recovery in the second half of the year.
“We still have a lot of work to do, but I am very confident that we are on the right path. We will bring adidas back again. Give us some time and we will say again: we did it!” He said.
Adidas forecast operating profit of around €500 million in 2024, with adverse currency effects expected to “significantly weigh on the company’s profitability” due to negative impacts on both reported revenue and gross margin development.