MADRID, 5 May. (EUROPA PRESS) -
The manufacturer of sports clothing and equipment Adidas registered losses of 39 million euros in the first three months of 2023, in contrast to the attributable net profit of 482 million recorded in the same period last year, as reported by the company.
In this sense, the company indicated that the interruption of the business of Yeezy, the brand developed in collaboration with Kanye West, represented a drag of around 400 million in the annual comparison, mainly in the regions of North America, China and EMEA ( Europe, the Middle East and Africa).
Adidas sales between January and March totaled 5,274 million euros, 0.5% less than a year earlier, while the multinational's sales costs increased by 9.7%, up to 2,911 million euros .
In the first quarter, Adidas sales registered growth of 3.1% in Europe, the Middle East and Africa (EMEA), to 1,996 million, while in North America they fell 16.1%, to 1,177 million.
On its side, sales in China totaled 884 million euros, which implies a decrease of 11.9%, but in Asia-Pacific revenues grew by 12%, up to 567 million, while in Latin America they increased by 42.6 %, up to 595 million.
Also, Adidas indicated that its gross margin for the first quarter fell 5.1 percentage points, to 44.8% from 49.9%, mainly as a consequence of the increase in supply chain costs, as well as higher discounts. in the market, which could not be offset by the significant positive effect of the price increases implemented by the company.
"The first quarter ended a little better than we expected," said Adidas CEO Bjorn Gulden, noting that sales growth excluding Yeezy was 9%.
On the other hand, the executive pointed out that inventories are still too high, but they are already 300 million euros lower than those at the beginning of the year, adding that the company continues to work on normalizing its 'stock' levels, which "is crucial " in order to reduce the discount levels.
"2023 will be a bumpy year with disappointing numbers, where maximizing our short-term financial results is not our goal. It is a year of transition to build a solid foundation for a better 2024 and a good 2025 and beyond," he explained.
In this way, the multinational confirmed that it continues to expect revenues, excluding the effect of the exchange rate, to decrease at a high single-digit rate in 2023 given the persistence of macroeconomic challenges and geopolitical tensions, with high risks of recession in North America and Europe, as well as uncertainty surrounding the recovery in China.
Additionally, Adidas expects its revenue performance will also be affected by efforts to significantly reduce high inventory levels, as the company continues to review options for Yeezy stock.
In this regard, he reiterated that if he decided to write off Yeezy inventory this would reduce operating profit by an additional €500 million this year, as well as take an estimated impact of another €200 million in costs related to the ongoing strategic review. "If all these effects were to materialize, the company expects to report an operating loss of 700 million euros in 2023," he confirmed.