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Sales decline in North America impacts Adidas' Q1 results

By Prachi Singh


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Adidas flagship store in Shanghai Credits: Adidas AG

In the first quarter, currency-neutral revenues at Adidas increased 8 percent driven by the strong momentum of the underlying Adidas business, which grew 5 percent. In addition, the sale of parts of the remaining Yeezy inventory generated revenues of around 150 million euros during the quarter.

In euro terms, the company’s revenues grew 4 percent to 5.458 billion euros impacted by 4 percent drop in North America sales, reflecting a double-digit decline in the wholesale channel as the company continued its disciplined sell-in approach.

Commenting on the first quarter update, Adidas CEO Bjørn Gulden said: “I am very happy to see that the business in Q1 developed better than we had expected. Sales, gross margin, and operating profit were all better than initially planned. Our full-price sales in our DTC channels were strong and our sell-out with our retail partners was higher than the sell-in. This means lower inventories, less discounts, and better gross margins both for our retail partners and for us.”

Adidas sales grow across product categories

The company said footwear revenues grew 13 percent during the quarter on a currency-neutral basis, driven by the strong brand momentum, particularly in the Originals and football categories.

Apparel sales were up 2 percent with high apparel inventories, particularly in the North American marketplace, leading to lower sell-in into the wholesale channel. In football, the company recorded double-digit growth in apparel in both wholesale and DTC as a result of the successful jersey launches ahead of the UEFA Euro 2024 and the Conmebol Copa América. Accessories declined 1 percent during the quarter.

From a channel perspective, the top-line development was driven by the company’s direct-to-consumer (DTC) business, which grew 20 percent on a currency-neutral basis during the quarter. Sales in Adidas’ own retail stores increased 11 percent, reflecting strong double-digit growth across the company’s full-price concept store fleet. E-commerce revenues grew 34 percent in the first quarter.

Currency-neutral sales in wholesale increased 2 percent.

Adidas posts growth in all markets except North America

Currency-neutral sales in Europe increased 14 percent during the quarter driven by double-digit growth in both DTC and wholesale. Revenues in emerging markets and Latin America also grew by 17 percent and 18 percent, respectively. Sales in Greater China were up 8 percent, with double-digit growth in wholesale and E-com.

Japan/South Korea posted revenue growth of 7 percent driven by a double-digit increase in DTC. Revenues in North America declined 4 percent during the quarter, reflecting a double-digit decline in the wholesale channel.

The company’s first-quarter gross margin was up 6.4 percentage points to 51.2 percent, operating profit increased to 336 million euros, reflecting an operating margin of 6.2 percent.

The company’s net income from continuing operations amounted to 171 million euros, while basic EPS from continuing operations were 0.96 euros.

Adidas raises outlook on strong Q1

Adidas expects revenues to increase at a mid to high-single-digit rate in 2024.

Unfavourable currency effects are projected to weigh significantly on the company’s profitability in 2024. They are expected to continue to adversely impact both reported revenues and the gross margin development in the remainder of the year.

Following the better-than-expected performance in the first quarter, the company also increased its full-year profit guidance on April 16. The company’s operating profit is now expected to reach a level of around 700 million euros.

Executive Management