Adidas, the prominent German sportswear manufacturer, has reported remarkable growth during the third quarter of 2024, indicating that chief executive Bjørn Gulden’s turnaround plan is effectively reviving the brand. The company’s recent performance has been characterized by a notable increase in revenue, particularly in various global markets, contributing to an optimistic outlook for the future.
In its latest report, Adidas announced a double-digit growth in currency-neutral revenue in most regions, excluding North America. This market has been struggling due to falling sales of the once-popular Yeezy sneakers, a product line that has significantly impacted its performance following the dissolution of its partnership with the rapper Ye. Despite this setback, the overall group operating profit surged to €598 million ($646 million), compared to €409 million during the same quarter the previous year.
Earlier projections had led Adidas to raise its annual profit targets for the third time, now projecting an operating profit of approximately €1.2 billion, which is an increase from an earlier forecast of €1 billion. Investors reacted positively, resulting in a near 3% increase in share prices after the announcement, contributing to a 16% rise in stock value for the year thus far.
Bjørn Gulden, who took charge in January 2023 during a tumultuous period for the company, has redirected Adidas’s strategy to reduce its heavy reliance on the Yeezy brand. His approach focuses on revamping the design process for new footwear and apparel lines, while also prioritizing cost-efficiency. The revitalization of classic products such as the Samba and Gazelle shoe lines has begun to show tangible results, with Adidas outperforming rival firms like Puma during this recovery phase.
One point of notable achievement is the revival of the SL 72, a running shoe from the 1970s, which is expected to be produced in larger volumes. This to connect more effectively with a target audience that is increasingly drawn to retro styles. Analysts have commented on Adidas’s resurgence, with some suggesting that the company has more to offer than just nostalgic sneakers.
Despite the outdated Yeezy inventory nearing its conclusion, which provided a €50 million operating profit in the third quarter, Adidas’s future seems bright as its other product lines gain traction. The future absence of this profit stream in the fourth quarter raises concerns, yet experts from Morgan Stanley believe that the strong top-line trends point to continued success in the upcoming months and into the next year.
Gulden shared insights on the growth pattern across all regions, sales channels, and product segments, noting that even North America has shown potential for recovery once the Yeezy brand is excluded from calculations. This indicates that the solid growth trajectory is not solely reliant on past partnerships but is bolstered by innovative product offerings and a renewed brand identity that resonates with consumers’ changing preferences.
As Adidas prepares to launch new lifestyle running shoes along with extending its superstar brand, the company aims to build on this momentum. The strategic direction established by Gulden has clearly begun to take root, suggesting that rigorous product development coupled with heightened market awareness can yield remarkable results.
Adidas serves as a powerful case study on how a company can navigate through crisis by making bold decisions that prioritize brand heritage while innovating for future demands. The synergy between retro revival and modern innovation, underscored by key operational shifts, showcases a road map for other brands in similar predicaments.
In conclusion, Adidas’s resurgence highlights the importance of adaptability and keen market insight in a highly competitive industry. With a focus on sustainable growth and product appeal, Adidas is not just making a comeback—it’s setting the stage for a new chapter of success in the athletic footwear market.
