Adidas AG shares rose after the company boosted its guidance for a second time in three months, helped by sales of more Yeezy sneakers from its canceled partnership with the rapper Ye and better demand for other models.
The company now expects an operating loss of about €100 million ($106 million) in 2023, it said Tuesday. That’s better than the €450 million loss Adidas forecast in July, and much improved from its initial warning of a possible €700 million shortfall if it had to write off all Yeezy inventory.
The stock climbed as much as 5.3% in early German trading. It’s up about 40% this year.
Adidas has carried out two successful drops of Yeezy products since May, and could see additional boosts from future sales from its inventory heading into the holiday shopping season. The company is impressing investors with the speed of Chief Executive Officer Bjorn Gulden’s turnaround efforts, which helped it surpass estimates for third-quarter sales and earnings.
Adidas appears to be “performing better than expected, both from an underlying perspective and also as it relates to Yeezy,” Piral Dadhania of RBC said in a note.
The sportswear company has shown signs of regaining momentum in China and is benefiting from strong global demand for its Terrace line of sneakers, which include classics like the Samba and Gazelle.
Adidas terminated its deal with Yeezy last October after Ye made a series of antisemitic remarks, leaving about €1.2 billion worth of sneakers in limbo. After the company decided in May to begin selling that inventory, it’s reduced the potential write-off from the remaining Yeezy products to around €300 million, it said late Tuesday.
Third-quarter sales of about €6 billion narrowly exceeded the €5.9 billion average estimate of analysts. The company is also now expecting to record €100 million in operating profit after excluding the Yeezy sales and the effects of a strategic review. Previously, it expected to break even on that metric.
“The company’s turnaround efforts have begun in earnest,” Poonam Goyal, an analyst at Bloomberg Intelligence, said in a note.
The sales are a boost for Gulden, who took over in January, as he tries to revive the company’s fortunes. Adidas has been struggling to grow in North America, in part thanks to a huge inventory of unsold footwear and apparel there.
The company has pledged to donate a “significant amount” of the Yeezy proceeds to charities that work to fight discrimination and hate speech.
(Updates with analyst commentary throughout)
