Adidas AG said its profit this year will be hit by unfavourable currency movements, but it plans to mitigate some of the damage by continuing to sell left-over inventory from its defunct Yeezy partnership with the rapper Ye.
The company expects to generate an operating profit of around €500 million ($542 million), according to a statement Wednesday. That’s below the average analyst estimate of €1.27 billion.
Adidas’s American depositary receipts fell 8 percent in trading after the close of European exchanges. Rivals Nike Inc. and Under Armour Inc. each fell as much as 2.6 percent.
The German sports shoe maker said it will sell remaining Yeezy inventory at cost, generating sales of €250 million, rather than writing it off.
Despite a €1 billion currency hit from factors including a devaluation of the Argentine peso in 2023, Adidas forecast a return to growth this year as it continues its turnaround efforts in the face of mounting concerns about global demand for sneakers and sports gear.
Currency-neutral sales will probably rise by a percentage in the mid single digits in 2024, Adidas said. That’s roughly in line with what analysts were estimating.
Chief executive officer Bjorn Gulden is entering his second year at the helm of Adidas, where he’s inherited a collection of crises from his predecessor. The Norwegian has a history of offering conservative outlooks early in the year and repeatedly outperforming them, a hallmark of his decade-long tenure as CEO of crosstown rival Puma SE.
In 2023, Adidas’s currency-neutral revenue stayed flat, which was an improvement upon earlier targets, the company said.
Investors have been looking for signs of weakness in the sector after Nike raised doubts in December about consumer demand in China and around the world and Puma warned about the impact of hyperinflation in Argentina.
By Tim Loh
Adidas Will Sell Its Yeezy Inventory
At its annual meeting Thursday, the company confirmed plans to sell its remaining stock of Yeezy sneakers rather than destroy the merchandise. Adidas also told investors that an investigation into Ye’s workplace misconduct did not substantiate claims of harassment.