Adidas raises 2024 profit guidance on robust footwear demand

Sportswear giant Adidas (ADDYY) has raised its full-year profit target for 2024, citing strong ongoing demand for its legacy footwear products, including the iconic Samba sneaker, as well as the sale of its remaining Yeezy inventory. The company now expects to generate a profit of $745 million for the full year, a significant increase from its previous guidance of $532 million.

Yahoo Finance Retail Reporter Brooke DiPalma breaks down the details.

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This post was written by Angel Smith

Video transcript

BRAD SMITH: This next story might knock your shoes off. Adidas raising its profit target for the year as the company gets a boost from strong demand for its Samba sneakers and the remaining sales of its Yeezy brand. Now, will this be enough to get Adidas or Adidas back on the map amid growing innovation struggles for the footwear brands more largely here and considerations there?

Joining me now in studio for this discussion we've got Yahoo Finance's Brooke DiPalma. Brooke, let's just start on the updated outlook here. What did Adidas say?

BROOKE DIPALMA: Yeah, absolutely. So based upon this better than expected performance in Q1 the company is now increasing its full year guidance for 2024. They now expect revenue to increase at a mid to high single digit rate. And they also, as you noted before, expect operating profit to come in higher as well, around $745 million that's as compared to what they previously thought was going to be up or rather come in at $532 million.

Now, this does come one month after the company posted its first loss in 30 years. And so Wall Street really liking this updated guidance as the company really sets out to reverse these declining sales. And those two factors that are boosting the outlook for the retailer include that selling off the remaining Yeezy inventory, something they've been looking to do for what? The past two years.

And in addition to that, this retro sneaker trend consumers really leaning in to this idea of the Samba, the Campus, and the Gazelle as you can see on the screen here. They really like this idea of these retro sneakers coming back, consumers buying them up.

BRAD SMITH: The Samba was last hot when I was in third grade, Brooke. So what's old is new again apparently for some of the lesser millennials out there. Or, I guess--

BROOKE DIPALMA: Gen Z, Millennials--

BRAD SMITH: Looking to get into--

BROOKE DIPALMA: --all the young folks.

BRAD SMITH: --what was hot when we came up, anyway. But that's whatever. Also, on the Yeezy front, you mentioned that they're not expecting to see further profit contribution during the remainder of the year. They noted that. I also got to wonder how well Anthony Edwards and some of the basketball lineup is doing for them. It's been a massive year for him as well on the NBA side.

BROOKE DIPALMA: Yeah, in addition to that, you have to take into consideration that the Olympics are happening this year. We're going to see Nike, Puma, and Adidas all coming in really hot, really looking to market and sell based upon what they're going to front during this summer in Paris. And in addition to that, we're just seeing this trend of consumers wanting to be comfy.

I just did a piece for Yahoo Finance last week on this really people leaning into those New Balances. People leaving leaning into Uggs, which is doing well for Decker brands and Crocs. And this idea of comfort, performance. But also some people thinking that this looks so trendy, and that it's just on point.

BRAD SMITH: I myself am in the market for comfort. I took a look at some clogs from Birkenstocks. So we'll see if they're comfortable, but I heard they're good for you. Anyway, Brooke, thanks so much. Appreciate it.