ADDYY Adidas AG (QX)

By Adria Calatayud

Shares in Adidas rose Tuesday after the company said the sale of the first batch of its remaining Yeezy-branded inventory helped its top and bottom lines in the second quarter and resulted in an upgrade to full-year guidance.

At 0741 GMT, shares in the German sportswear giant were up 3.9% at EUR181.66.

Adidas expects a 5% drop in revenue to 5.34 billion euros ($5.91 billion) for the quarter, with an operating profit that is forecast to fall to EUR176 million from EUR392 million in the year-earlier period, according to preliminary figures released late Monday.

The company said the potential write-off of the remaining Yeezy inventory is now expected to be EUR400 million compared with the EUR500 million initially forecast after it parted ways with musician and designer Kanye West, who is also known as Ye. As a result, the company expects a narrower 2023 operating loss of EUR450 million, which compares with the EUR700 million it originally anticipated.

Sales for the full year are forecast to decline by a mid-single percentage digit at constant currency, against a previous expectation of a high-single-digit fall, the company said.

Adidas's upgraded full-year guidance looks conservative and likely factors in risk of a weaker economy in the second half, analysts at Jefferies said in a research note.

"It seems increasingly clear that 2023 will remain a year of transition, with the underlying profit rebuild starting in earnest 2024," the analysts said.

Write to Adria Calatayud at adria.calatayud@dowjones.com

(END) Dow Jones Newswires

July 25, 2023 04:11 ET (08:11 GMT)

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