Adidas AG (OTCQX:ADDYY) has emerged from its calamitous collaboration with controversial musician Kanye West to raise its full-year sales guidance after posting its first annual loss since 1992 earlier this year.
The German sportswear giant had a long-running sneaker collaboration with West, aka Yeezy, which became an own goal in the wake of a raft of antisemitic statements by the rapper.
In early 2023, Adidas warned that ending its partnership with West came with a €500 million hit to profits.
Combined with slower China sales, the company was forced to lower its forward sales guidance at the time.
But with the Yeezy debacle winding down, Adidas appears to be back in the driving seat.
Company revenues grew by 9% year on year to €5.8 billion in the second quarter (though when stripping away Yeezy sales in both quarters, revenues actually increased 16%).
Adidas continues to sell down the remaining Yeezy stock at cost, contributing to around €50 million in profits in the second quarter.
Across all brands, operating profit nearly doubled to €346 million.
This reflected “better sell-throughs, reduced discounting, lower sourcing costs and a more favourable category mix”, said Adidas.
Adidas now expects revenues to increase at a “high-single-digit rate” in 2024, a stronger turn of phrase than previous guidance of a “mid- to high-single-digit rate”.
Full-year operating profit is expected to exceed €1 billion, up from previous guidance of €700 million.
Shares added 4.3% on Wednesday in response to the raised guidance