Adidas bumps up earnings guidance after Q2 revenue boost

Sportswear giant Adidas has hiked its full-year earnings guidance after a “better than expected” second quarter with an 11 per cent increase versus the year prior.

The company’s sales grew by 9 per cent to US$6.3 billion (A$9.3 billion) – excluding Yeezy sales in both years – with a 16 per cent increase in currency-neutral revenues.

The company’s gross margin reached 50.8 per cent in Q2, reflecting better sell-throughs, reduced discounting, lower sourcing costs and a more favourable category mix.

Meanwhile, its operating profit for the second quarter increased to $347 million ($514 million), including a contribution of around $54 million ($74 million) from the sale of parts of the remaining Yeezy inventory.

In light of the strong performance, Adidas has increased its full-year guidance, now expecting currency-neutral revenues to increase at a high-single-digit rate this year, up from the previous mid- to high-single-digit range.

The company’s operating profit is also expected to reach around $1.1 billion ($1.6 billion), up from the previous guidance of an estimated $763 million ($1.13 billion).

Adidas anticipates the sale of the remaining Yeezy inventory to result in additional sales of around $163.5 ($242 million), without further profit contribution for the remainder of the year.

However, the company says it will continue to expect unfavourable currency effects to significantly impact profitability this year, both in reported revenues and gross margin development.

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