Following the release of Adidas’ figures for the three months ending 30th September 2023; Alice Price, apparel analyst at GlobalData, a leading data and analytics company, offers her view: “Adidas’ latest results show that the brand still has a long road to recovery, with Q3 FY2023 total sales declining by 6.4% to reach €6.0bn. This is worse than H1, when it declined 2.6%, echoing the slowdowns recently experienced by the likes of Nike and Puma, but is better than it previously expected, thanks to a focus on full price sales and reduced discounting. The quarter also benefited from the last drop of its remaining Yeezy stock at the start of August 2023, which generated €350m in sales, though despite still being popular in the streetwear scene, sales were below that of the previous year as its desirability begins to wane. The brand has made significant moves to reduce overall stock levels in attempt to protect its operating profit, and though it was still down 27.5% on the year, this is a notable improvement on H1 when it fell 71.5%. Adidas’ full year outlook remains muted, but it has now adjusted its currency-neutral revenue guidance to a low single-digit percentage decline, up from a high single-digit decline projected at the start of the year.
“Footwear represented Adidas’ strongest category, with currency-neutral growth of 6%, largely driven by its Originals range, as its Samba and Gazelle styles became the “it” shoes for young fashion conscious shoppers. This is in spite of Adidas’ cautious approach towards inventory levels making it struggle to meet demand, so the brand must ensure this strategy does not stunt its performance in the future. Its football and basketball footwear also performed well, with the latter aided by the launch of NBA player Anthony Edward’s signature basketball shoe. Apparel sales declined 6%, attributed to reduced demand for its football products, after experiencing strong sales last year due to the hype surrounding the FIFA World Cup, suggesting that Adidas’ initiatives amid this year’s FIFA Women’s World Cup failed to generate the same buzz.
“Latin America was the most resilient region during the quarter, with currency-neutral revenue rising 12.8%, as its growing economy fuels consumer appetite. Revenue in Asia Pacific and Greater China also grew modestly, increasing by 5.7% and 6.8% respectively, driven by an uplift in demand since the removal of lockdown restrictions at the end of 2022, alongside the regions’ growing urban and middle-class populations. EMEA and North America represent Adidas’ worst performing regions, reporting declines of 1.9% and 8.8% respectively, as ongoing inflationary pressures in Europe and the US drive consumers to be more discerning of the brands they choose to shop at.
“Looking forward, Adidas must continue to lay the foundations for recovery, with the popularity of its lifestyle footwear a promising start to enhancing brand perceptions and reclaiming its fashion credentials. Adidas should build on this momentum by focusing on the enhancement of products in its apparel and accessories categories too, to become front of mind among shoppers seeking the latest sportswear and athleisure.”
