Adidas works to clear excess inventory and recover from collaboration termination
- Adidas expects North American sales to decline this year
- Sales growth in China and Latin America expected to be strong
- Adidas working to clear excess inventory in North America
- Termination of collaboration with Kanye West impacted profitability
- Sales growth in North America anticipated in the second half of the year
Adidas anticipates a decline in North American sales this year, while expecting strong sales growth in China and Latin America. The company has been focusing on clearing excess inventory, especially in North America, following the termination of its collaboration with rapper Kanye West. This termination had a significant impact on profitability. Instead of writing off most of its Yeezy inventory, Adidas plans to sell off the remaining stock at cost price this year. The fallout from the collaboration termination and high inventory levels affected North America sales in 2023, which fell by 16%. In contrast, larger rival Nike also experienced a decline in revenue and warned of cautious consumer spending. Adidas does not anticipate sales growth in North America this year, but expects double-digit growth in China and Latin America. However, the company expects sales growth to be concentrated in the second half of the year, as the first half will be focused on reducing inventories in North America. Despite the challenges, Adidas remains confident in its recovery efforts and has already reduced inventories by almost 1.5 billion euros ($1.64 billion) in 2023. The company plans to propose a flat dividend for 2023 and aims to return to its policy of paying annual dividends to shareholders. Adidas also confirmed its 2024 guidance for operating profit and sales growth.
Factuality Level: 8
Factuality Justification: The article provides factual information about Adidas’ performance in different regions, the impact of terminating the collaboration with Kanye West, the company’s efforts to reduce inventory, and its financial outlook. The information is presented in a straightforward manner without sensationalism or bias.
Noise Level: 3
Noise Justification: The article provides relevant information about Adidas’s performance, particularly in North America, and the impact of terminating the collaboration with Kanye West. It includes details about sales forecasts, inventory reduction efforts, and future plans. The article stays on topic and supports its claims with specific examples and quotes from company executives. However, it lacks in-depth analysis of long-term trends or antifragility strategies, which prevents it from scoring higher.
Financial Relevance: Yes
Financial Markets Impacted: Adidas
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Rating Justification: The article discusses Adidas’ expectations for sales in different regions, particularly focusing on the decline in North American sales due to inventory issues and the termination of the collaboration with Kanye West. While there is no mention of an extreme event, the financial impact on Adidas is significant.
Public Companies: Adidas (ADDYY), Nike (NKE)
Key People: Bjorn Gulden (Chief Executive)
Reported publicly:
www.marketwatch.com 
