Adidas rises as Q1 results better than expected, but CEO cautious of ‘bumpy year’

Adidas AG (OTC:) shares rallied Friday after reporting better-than-expected and revenue in the first quarter, despite the adverse impact of the company ending its Yeezy partnership with rapper Kanye West.

Even so, Adidas said it continues to expect to report an operating loss of €700 million in 2023 if it decides not to repurpose any of the existing Yeezy products going forward.

Full-year revenues are expected to decline at a high-single-digit rate as macroeconomic challenges and geopolitical tensions persist, the company said.

In the first quarter, Adidas reported an operating profit of €60M, above expectations, while revenues declined 1% to €5.27 billion.

“Q1 ended a little better than we had expected with flattish sales and a small operating profit of € 60 million. Sales growth, excluding Yeezy was 9%. Great double-digit growth in Latin America and Asia-Pacific and slight growth in EMEA despite Russia were in line with our plan,” said Adidas CEO Bjørn Gulden.

While Adidas’ total revenues in Greater China were down 9%, the company said it achieved double-digit sell-out growth.

Despite the positives, Gulden warned that “2023 will be a bumpy year with disappointing numbers.” He explained that maximizing the company’s short-term financial results is not its goal this year, which will be “a transition year to build a strong base for a better 2024 and a good 2025 and beyond.”