German giant Adidas has just announced its first annual loss in more than 30 years, so it will soon be placing its hopes on the Chinese market.
Adidas reported its first loss since 1992 of 58 million euros ($63.4 million) last year. In 2022, the company achieved a net profit of 254 million euros ($277.61 million).
The German sportswear company's business has been in decline since it cut ties with superstar Kanye West in October 2022. Once highly profitable, the Yeezy sneaker line under the two companies' collaboration has had to stop new production.
Adidas CEO Bjorn Gulden, who is working to clear out remaining Yeezy inventory, is looking to improve relationships with retailers. The company has increased production of its popular low-top sneakers, boosting Samba and Gazelle lines, helping footwear sales rise 8% in the fourth quarter while apparel sales fell 13%.
Products in an Adidas store in Garden City, New York, USA, October 25, 2022. Photo: Reuters
In Bjorn Gulden’s first year as CEO, Adidas’ stock has rallied, outperforming Nike and Puma. “It’s not good enough, but 2023 has ended up being better than I expected at the beginning of the year,” Gulden said.
Thomas Joekel, chief investment officer at Union Investment, said Adidas has been on the right track since Bjorn Gulden took over. "The brand's popularity has increased. This can also be seen in the fact that there are fewer products on sale now," he said.
Adidas expects its core business — excluding Yeezy — to improve this year, with growth of at least 10% in the second half. The company expects a stronger recovery in China, with sales rising by double digits after an 8% increase in 2023.
In contrast, the North American market is expected to continue to weaken, with sales down about 5% this year. Lower demand and high inventories have weighed on the business there since last year. Adidas said sales in North America fell 21% in the fourth quarter and 16% for the year.
Phien An ( according to Reuters )
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