In a strategic move to revitalize its brand, Adidas AG reports a significant €350 million ($374 million) surge in sales from Yeezy shoes during Q3. This surge in revenue is part of Adidas’s ongoing efforts to manage inventory following the termination of its partnership with rapper Ye.
Beyond the Yeezy phenomenon, the German sportswear giant discloses a 2% increase in currency-neutral sales for its diverse offerings in the quarter. Classic sneakers such as Samba and Gazelle play a pivotal role in this growth, as stated in the official company release.
Adidas CEO Bjorn Gulden acknowledges the brand’s current performance is a work in progress, emphasizing the need for time to restore Adidas to its pinnacle as the leading sports brand globally. Despite challenges, Adidas shares have risen by a third this year, outperforming its competitor Puma SE.
Investors closely monitor Adidas’s progress beyond Yeezy, viewing it as a barometer of CEO Gulden’s turnaround initiatives. Gulden’s commitment to agility in trend adaptation and the successful scaling of the Terrace line of sneakers, featuring Sambas, Gazelles, and Spezials, injects fresh momentum into Adidas’s Originals franchise.
However, the company still grapples with high unsold inventory levels, particularly in the US, impacting business. Inventories show a promising 23% decline in the quarter, slightly exceeding expectations.
Adidas faces challenges in the US, where efforts to supply the market have slowed, resulting in a 9% drop in revenue across North America in the quarter. On a brighter note, sales in Greater China surged by almost 6%, and other regions, including Asia-Pacific, Latin America, and EMEA, report positive growth.
The Yeezy collaboration termination last October, following controversial remarks by Ye (formerly Kanye West), prompted Adidas to reassess its strategy. The company successfully raised approximately €750 million by selling Yeezy products since May. A potential write-off of the remaining Yeezy inventory is estimated at around €300 million.
Looking ahead, Adidas confirms its guidance of an anticipated operating loss of about €100 million in 2023, emphasizing its commitment to strategic shifts and overcoming challenges in the evolving sportswear landscape. Explore Adidas’s triumphs and challenges in the dynamic world of sportswear.