Adidas Expects Profits of €700m in 2024 After Kanye West Partnership

Tuesday, 16th April 2024 – 7 Hours Ago

Adidas Rebounds With Impressive Profit Projections

Adidas, the German sportswear giant, has emerged triumphantly from its turbulent collaboration with rapper Kanye West, announcing optimistic financial forecasts of €700m (£598m) for the year 2024. After the company’s unsettling break-up with West and reported losses just last month, this newfound success comes as a relief to investors and strengthens Adidas’ competitive position in the market.

Strategic Decision to Sell Yeezy Trainers Pays Off

Back in February, Adidas revealed its plan to sell the remaining Yeezy trainers from its partnership with West at cost price or above, an approach that has evidently paid dividends. Innovative and strategic measures, combined with strong customer demand, facilitated an impressive achievement that surpassed initial forecasts by €200m.

First Quarter Results Exceeded Expectations

Adidas reported accelerated growth in Q1 2024, transforming its financial position significantly. The company’s quarterly operating profit rose to €336m, a substantial increase from the €60m reported during the same period last year, which was negatively impacted by the separation from West. This positive momentum represents a powerful comeback and showcases the strength of Adidas’ resurgence within the sportswear industry.

Yeezy Remains a Lucrative Venture

During the first quarter, Adidas successfully sold an additional €150m worth of Yeezy products, reaping a profit of approximately €50m. Although the forthcoming sale of the remaining Yeezy stock later this year is not expected to generate additional profit, it reflects Adidas’ determination to wind down this powerful collaboration on a high note.

Commitment to Social Responsibility

In a demonstration of goodwill, Adidas pledged to donate a portion of the proceeds from Yeezy sales to charitable organizations combatting hate. This noble gesture ensures that Adidas’ legacy, beyond the business realm, hinges upon fostering a more inclusive and compassionate society.

Yeezy Fallout and Adidas’ Resilience

Adidas experienced a challenging period following its decision to cut ties with Kanye West in November 2022 due to his controversial and offensive remarks on social media. However, the brand’s broad and diverse customer base, consisting of influential and discerning individuals, has reinforced its resilience in the face of external controversies.

Sunak’s ‘Fulsome’ Apology

Adidas and its renowned Samba brand captured the headlines recently when it was revealed that British Prime Minister Rishi Sunak has been a devoted customer for numerous years. Recognizing the potential impact on its discerning customer base, Sunak issued a sincere and comprehensive apology during an interview with LBC radio, emphasizing his long-lasting appreciation for the Adidas brand.

Argentine Peso Devaluation Affects Profit Margins

While Adidas anticipates reduced profits due to the Yeezy collaboration, the brand also acknowledges the adverse effects of the Argentine peso’s devaluation. The devaluation, which occurred at the end of 2023, has repercussions on Adidas’ financial results as the company has been the longstanding supplier of national football team shirts in Argentina. Key competitor, Puma, also felt the sting of Argentina’s currency devaluation, impacting its financial performance in this crucial and rapidly growing market.