Companies

adidas poised to report the highest profit in three years

Jul 12, 2024 Germany

The sportswear company is expected to post strong sales and its highest profit margin in three years in the second quarter, according to analysts. The forecast comes amid recent struggles at rival Nike

The resurgence of adidas’ classic Samba and Gazelle models in new colours and limited editions, coupled with Nike’s weak sales, seems to have set the stage for a potential shift in the sportswear landscape. While the Oregon-based company’s shares fell as much as 20%, adidas shares barely reacted, suggesting that investors see Nike’s weakness as an opportunity for the German brand.

“Nike, in terms of product and message, is very much off its game and Adidas is having a bit of a moment”, Simon Irwin, retail and sporting goods analyst at Tanyard Advisory, told Reuters.

Cedric Rossi, a next generation consumer analyst at Bryan Garnier, agreed, saying that “Nike is less innovative than in the past and competition has increased, providing retailers with a wider range of brands to choose from”.

At this stage, analysts expect Adidas to report a profit margin of 51.4% for the second quarter, which would be the highest in three years. Quarterly revenue is expected to increase by 4.5% year-on-year to 5.6 billion euros.

It should also be noted that adidas appears to have successfully managed the financial fallout from the termination of the Yeezy partnership, with recent sales of remaining inventory contributing an estimated 400 million euros to its 2023 revenue.

The company will report its first half results on the 31^st of July.

Source: reuters.com

Image Credits: designscene.net

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