Adidas (OTC:ADDYY) raised its full-year guidance on Tuesday following a strong performance in the second quarter of 2024.
The sportswear giant reported that currency-neutral revenues increased by 11% compared to the previous year, with euro-denominated revenues rising 9% to €5.822 billion, up from €5.343 billion in 2023. Excluding Yeezy sales, currency-neutral revenues saw an impressive 16% growth.
The company's gross margin for Q2 was 50.8%, slightly down from 50.9% in the previous year. However, the underlying Adidas gross margin improved significantly, driven by better sell-through rates, reduced discounting, lower sourcing costs, and a more favorable category mix.
Adidas stated: "The significantly smaller Yeezy business had a negative impact on the year-over-year comparison."
Adidas's operating profit for the second quarter surged to €346 million, nearly doubling the €176 million reported in the same period last year. This figure includes a contribution of approximately €50 million from the sale of parts of the remaining Yeezy inventory.
Given the better-than-expected performance and current momentum, Adidas has updated its full-year guidance. The company now anticipates currency-neutral revenues to increase at a high-single-digit rate, up from the previous forecast of a mid- to high-single-digit rate.
Additionally, Adidas expects its operating profit to reach around €1.0 billion, a significant increase from the earlier projection of approximately €700 million.
Adidas's revised guidance assumes the sale of the remaining Yeezy inventory at cost, which is expected to generate additional sales of around €150 million without further profit contribution.
Despite these positive adjustments, the company continues to anticipate significant unfavorable currency effects impacting profitability, especially noted during the first half of the year.
Following the earnings release, shares of rival Nike rose, currently trading around 1.7% higher.
However, back in June, Nike reported revenue of $12.6 billion, missing the consensus estimate of $12.89 billion. It also forecasted a surprise decline in fiscal 2025 revenue as demand has been impacted by newer brands.
Nike shares are down more than 32.5% this year.