Adidas lifts profit guidance as Yeezy sell-off performs strongly

(Sharecast News) - Adidas shares were rising strongly in Frankfurt on Wednesday after the sporting apparel and footwear giant surprised the market with expectations of booking a profit this year, helped by its ongoing sell-off of Yeezy stock. The Bavaria-headquartered company said it should make an underlying operating profit of "around €100m" for 2023, compared with earlier guidance of breakeven.

The sportswear manufacturer, the largest in Europe, said third-quarter revenues fell 6% year-on-year to €6bn, with operating profits dropping 27% to €409m.

However, the company said its performance was positive impacted by the sale of parts of its remaining Yeezy inventory, as well as better-than-expected underlying sales.

After its highly publicised breakup with Kanye West resulted in ceasing the Yeezy line, Adidas announced earlier in the year it would not destroy unsold stock but instead try to sell it.

Due to strong sales over the second and third quarters, the write-off of the remaining inventory is now estimated at €300m for the year, down a from earlier estimate of €400m, though it still expects to be hit by one-off costs related to the strategic review of "up to €200m".

Accordingly, Adidas now expects to report an total operating loss of €100m for the year, significantly less than the €450m previously guided to.

The stock was up 4.2% at €178.06 in Frankfurt by 1034 CEST.