Release Date: March 05, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Adidas AG (ADDDF, Financial) reported a strong 12% currency-neutral sales growth for 2024, with the Adidas brand itself growing by 13%.
- The company achieved a significant improvement in gross margin, reaching 50.8%, which is a 330 basis point increase from the previous year.
- Operating profit increased by 400% to EUR 1,337 million, demonstrating strong financial performance.
- Adidas AG (ADDDF) experienced double-digit growth in most regions, with particularly strong performance in Europe and Latin America.
- The company successfully managed inventory levels, with a focus on reducing discounting and improving full-price sell-through rates.
Negative Points
- Adidas AG (ADDDF) faces potential challenges from macroeconomic factors, including inflation and potential tariffs in the US, which could impact retail volumes.
- The company is still dealing with the absence of Yeezy sales, which contributed EUR 650 million in 2024, and this will not be repeated in 2025.
- There are concerns about the competitive landscape, particularly in the US, where Adidas AG (ADDDF) aims to grow but faces strong competition.
- The company is undergoing organizational changes, including the reduction of 500 roles at headquarters, which may impact internal operations.
- Adidas AG (ADDDF) is cautious about the economic environment, particularly in Europe, where retailers have expressed concerns about consumer demand and traffic.
Q & A Highlights
Q: Can you provide insights into the wholesale channel's performance in Q4 and its impact on Q1 2025? Also, what are your thoughts on the European regional outlook for wholesale?
A: There was no pull-forward effect in Q4; it was driven by pre-orders and reorders. The European wholesale outlook is high single-digit growth, reflecting cautiousness due to volatile demand and economic concerns, but the order book remains strong. (Bjorn Gulden, CEO)
Q: With the improvement in free cash flow and reduced debt, is there a possibility of reinstating the share buyback program in 2026?
A: While we are pleased with the strong balance sheet, the focus for 2025 is on investing in the operational business and paying dividends. A share buyback might be considered in 2026 if the environment normalizes. (Harm Ohlmeyer, CFO)
Q: How do you view the competitive landscape for 2025, especially considering the actions of industry leaders?
A: We don't foresee significant changes in the competitive landscape impacting us. While there has been discounting, our full-price sales have remained strong. We are not overly concerned about competitors' actions affecting our performance. (Bjorn Gulden, CEO)
Q: Can you elaborate on the gross margin outlook for 2025, considering the headwinds and tailwinds?
A: We are confident in improving our gross margin compared to 2024, despite the 30 basis points headwind from Yeezy. We expect benefits from product costs and reduced discounting, though currency volatility remains a factor. (Harm Ohlmeyer, CFO)
Q: Regarding the tariffs, where do you see the cycle currently, and what is the growth outlook?
A: The tariffs are still in a growth phase, with demand varying by market. We manage these franchises market by market, and while some markets are reaching maturity, others continue to grow. We remain optimistic about the potential for further growth. (Bjorn Gulden, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
