Adidas warns of 'bumpy' year ahead despite above-forecast numbers

Adidas saw its shares jump on Friday, after a better-than-expected first quarter, but warned 2023 was still set to be "disappointing".

The German sportswear brand, which has been hit hard after its partnership with controversial rapper Kanye West abruptly ended, said currency-neutral revenues were largely flat year-on-year at €5.27bn in the three months to March end.

Once West’s Yeezy brand was stripped out, sales growth was 9%.

Operating profits, meanwhile, were €60m, a sharp fall on last year’s €437m but above analyst expectations for around €15m.

As at 1045 BST, shares in Adidas were trading 8% higher.

Chief executive Bjorn Gulden said: "The first quarter ended a little better than we had expected, with flattish sales and a small operating profit.

"The decline in lifestyle and the loss of Yeezy are of course hurting us. But also here we see some positive developments.

"Adidas has all the ingredients to be the best sports brand in the world, to grow strongly and to be a profitable company. We just need time. 2023 will be a bumpy year with disappointing numbers, where maximising our short-term financial results is not our goal."

The gross margin fell 5.1 percentage points during the quarter to 44.8%, due to higher supply chain costs, increased discounting, inventory allowances and the impact of Yeezy.

Adidas terminated its highly profitable partnership with West last October, following a series of anti-Semitic comments by the rapper. Gulden joined Adidas from rival Puma at the start of the year tasked with turning the business around.

Adidas did not provide an update on what it plans to do with its stock of unsold Yeezy trainers.