adidas AG (OTCQX:ADDYY) management call “intrigued” analysts at Jefferies when it “twice-confirmed” its aim for double-digit sales growth in its post-recovery phase.
Analysts noted this implied “punchy” levels of global share gains for the sportswear brand.
In the management call held by new CEO Bjørn Gulden, who took over at the start of this year, the broker noted a lot of the remarks focused on the strengths of the business rather than the challenges of the legacy inherited.
“The group’s back catalogue is unparalleled, the product pipeline is strong, the resources of the product innovation and marketing adequate,” said Jefferies.
However, the broker was surprised by the lack of reference to supply chain shortcomings, as well as no real distancing from the product segmentation which was introduced last year.
The main culprit for Adidas’ share price loss, down 50% since 2020, was its inability to act decisively on commercial decisions.
The ambition for the retailer, therefore, is to tackle this head-on so that by summer 2024 “the commercial proposition can prove more compelling,” said the broker.
However, the speed at which this can be achieved is dependent on the pace at which the over inventory can be solved, the broker said.
The fate of the €400mln Yeezy inventory remains to be decided, but it does not look like it will be resurrected under a different brand, although it seems Gulden does not expect this to be necessary to make Adidas “the best sports brand in the world once again.”
Yesterday, the German company announced today it would be slashing its dividend by 78% to €0.7 per share following a tough 2022 which saw the company part ways with the scandal-plagued Kanye West.
Adidas also said departing CEO Kasper Rorsted received a €16mln pay-out following his departure last November.