The following is a summary of the Adidas AG (ADDYY) Q4 2023 Earnings Call Transcript:

Financial Performance:

• Adidas reported flat currency neutral sales relative to 2022, but suffered a reported decline of around 5% due to currency translation effects, leading to a sales loss of nearly EUR 1 billion.

• The company attained an operating profit of EUR 268 million, exceeding expectations of a EUR 100 million loss.

• Gross margin increased slightly to 47.5%.

• The company was able to write-off and sell the excess wholesale inventory of its Yeezy line, covering costs of EUR 268 million.

• Mid-term EBIT returns of 10% are expected by 2026 with double-digit growth projected to occur by the end of the year.

• Exchange rate pressures and potential delivery issues associated with troubles in the Red Sea contribute to some fiscal uncertainty for the upcoming year.

Business Progress:

• Adidas launched a new product, the Predator, and continues to broaden customer engagement and local sports recognition across their product lines.

• An overinvestment strategy in sales and marketing is designed to enhance relationships with consumers and retailers.

• Improvements have been observed in relationships with retailers, higher sell-through rates, and top-line growth.

• Adidas plans to diversify its product lineup to include running lifestyle footwear within the next 18 to 24 months.

• Growth has been noted in the lifestyle business with higher margins, and this momentum is expected to continue, especially in the European, Chinese, and North American markets.

More details: Adidas AG IR

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