Adidas AG ((ADDYY)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Adidas AG’s recent earnings call exuded a positive sentiment, buoyed by record-breaking revenue figures, robust margin performance, and notable growth in key regions and categories. Despite these successes, the company acknowledged ongoing challenges in North America and the impact of tariffs in the U.S., which remain areas of concern.
Record-Breaking Revenue and Growth
Adidas reported a remarkable EUR 6.63 billion in Q3, marking the highest quarterly revenue in the company’s history. This achievement represents a 12% currency-neutral growth, underscoring the brand’s strong market position and effective growth strategies.
Strong Margin Performance
The company achieved a gross margin of 51.8%, which is 50 basis points higher than the previous year. This improvement highlights Adidas’s operational efficiency and ability to maintain profitability amidst various market challenges.
EBIT Achievements
Adidas’s EBIT reached EUR 736 million in Q3, with an EBIT margin of 11.1%. This financial performance reflects the company’s effective cost management and revenue generation capabilities.
Regional Growth Success
Adidas experienced significant growth in key markets, with Greater China up 12%, and Japan and South Korea both up 11%. Latin American markets also continued to perform strongly, contributing to the company’s overall success.
E-commerce Growth
The digital segment of Adidas’s business saw a 15% increase in e-commerce sales, indicating strong performance in the online retail space and the effectiveness of its digital strategies.
Sports Performance
Performance sports categories saw a 17% increase, with particularly notable success in football, running, training, and basketball. This growth reflects Adidas’s strong brand presence and product appeal in these segments.
World Cup Opportunity
Adidas anticipates a significant opportunity from the upcoming World Cup, estimating a potential EUR 1 billion boost, which could further enhance its market position and financial performance.
North America Market Challenges
Despite overall growth, North America only saw an 8% increase, hindered by issues in the accessory business due to distribution and delivery challenges. This remains a focal area for improvement.
Tariff Impact in the U.S.
The U.S. tariffs are expected to negatively impact Adidas’s P&L by approximately EUR 120 million, presenting a significant challenge that the company needs to navigate carefully.
Inventory Concerns
Inventories have risen by 26% currency neutral, which Adidas attributes to a strategic decision. This increase is part of the company’s broader strategy to manage supply and demand effectively.
Forward-Looking Guidance
Looking ahead, Adidas projects an operating profit of around EUR 2 billion for the full fiscal year 2025, with a continued focus on achieving a 10% EBIT margin. The company remains committed to navigating challenges such as tariffs and market uncertainties while capitalizing on growth opportunities.
In summary, Adidas AG’s earnings call highlighted a period of strong financial performance and strategic growth, marked by record revenues and robust margins. While challenges in North America and tariff impacts pose hurdles, the company’s forward-looking guidance remains optimistic, with a focus on sustaining growth and profitability.