Adidas registered a loss of 39 million euros in the first quarter of this year, in contrast to the profit of 482 million registered in the same period last year, the multinational sporting goods company announced this Friday.
In this regard, the company indicated that the end of deal with Yeezythe brand developed in collaboration with Kanye West, accounted for losses of around $400 million year-on-year, primarily in the North America, China and EMEA (Europe, Middle East and Africa) regions.
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Adidas sales up to March of this year totaled 5,274 million euros, minus 0.5% compared to the same period of the previous year, while the cost of sales of the multinational increased by 9.7%, up to 2,911 million euros.
In the first quarter, Adidas sales grew 3.1% in Europe, the Middle East and Africa (EMEA) to €1,996 million, while in North America they fell 16.1% to €1,177 million.
Sales in China, meanwhile, amounted to 884 million euros, a drop of 11.9%but revenues in Asia-Pacific grew 12% year-on-year to 567 million euros, while in Latin America increased by 42.6% to 595 million euros.
Adidas also revealed that the gross margin in the first quarter fell 5.1 percentage points to 44.8% (49.9% in the same period of the previous year), mainly due to the negative impact of higher costs in the supply chain, as well as higher discounts, which could not be offset by the positive effect of price increases implemented by the company.
“The first quarter ended a little better than we expected,” Adidas chief executive Bjorn Gulden said, adding that sales growth, excluding Yeezy, was 9%.
On the other hand, the manager stressed that inventories are still “too tall”but that they are already 300 million euros lower than those at the beginning of the year, adding that the company continues to work on “normalizing its stock levels”, which “is crucial” to be able to reduce discount levels.
“2023 will be a bumpy year, with disappointing numbers, in which maximizing short-term financial results is not our goal. It is a year of transition to build a solid foundation for a better 2024 and a good 2025 and the following years”, explained the manager.
Thus, the multinational confirmed that it continues to forecast that revenues, excluding the effect of the exchange rate, will fall at a high single-digit rate in 2023, given persistent macroeconomic challenges and geopolitical tensions, with high risks of recession in North America and Europe, as well as the uncertainty surrounding the recovery of China.
In addition, Adidas expects that its recipe development will also be affected by initiatives to significantly reduce high inventory levels, while the computational calculation of its recipes will be affected by the current economic situation in the United States and Europe.
Source: Observadora
