Adidas rebounds more than 5.7% on the Frankfurt Stock Exchange, to 184.88 euros, after presenting preliminary figures for its better-than-expected second-quarter results after the first sales of items from Kanye West’s ‘Yeezy’ inventory. Demand for brand items after concluding the collaboration with the rapper has been better than expected. Adidas has been more optimistic about the full year, forecasting a mid-single-digit drop in revenue this year (previously a high-single-digit drop).
Billing fell in the second quarter to 5,343 million (-5%) and operating profit fell to 176 million (-55.1%), reflecting an operating margin of 3.3% compared to 7% the previous year. It also forecasts balanced operating profit net of one-off effects related to the ‘Yeezy’ brand and the strategic review it applies.
Also, expect losses of $400 million from ‘Yeezy’ brand inventory (was $500 million) and strategic review costs of $200 million (no change). That’s why Adidas forecasts an operating loss of $450 million in 2023 (previously a loss of $700 million) and says successful sales of ‘Yeezy’ brand inventory could further improve the company’s bottom line. After breaking the contract with the singer, one of the group’s options to dispose of the inventory was to put the ‘stock’ products on sale and donate a significant part to NGOs.
It is not the only problem that Adidas has had to face this year. The company has announced the termination of the agreement with Beyoncé at the end of March and the sportswear firm will no longer release sportswear and footwear due to the lack of sales that the company has suffered. The singer’s clothes have not been as successful as expected, so the collaboration will end once Adidas takes out this year’s collections from the Ivy Park brand, which in November 2018 Beyoncé bought completely from Phillip Green, owner of Topshop, with whom he launched the brand in 2016.
Despite this, so far this year it is the signature of the entire Dax that has appreciated the most. Specifically, the titles rise more than 44% since last January 2 and push the German reference stock index above 16%, up to 16,200 points, including dividends, since they are not excluded from listing.
