The giant German sportswear retailer Adidas has just announced its first annual loss in over 30 years, with hopes of growth in the Chinese market.
For the first time since 1992, Adidas reported a loss of 58 million euros (63.4 million USD) in 2023. In 2022, the company achieved a net profit of 254 million euros (277.61 million USD).
The German sportswear company’s business declined after it ended its relationship with the star Kanye West in October 2022. Once a highly profitable venture, the Yeezy athletic shoe line, in collaboration with the artist, ceased new production.
Adidas CEO Bjorn Gulden, in an effort to clear the remaining Yeezy inventory, is working to improve relationships with retailers. Capitalizing on the popularity of low-profile athletic shoes, the company increased production of the Samba and Gazelle lines, resulting in an 8% increase in footwear sales in Q4, while apparel sales decreased by 13%. In Gulden’s first year as CEO, Adidas stock rebounded, outperforming Nike and Puma. “It’s still not good enough, but 2023 ended better than I expected at the beginning of the year,” Gulden said.
Thomas Joekel, Chief Investment Officer at Union Investment, assesses that Adidas has been on the right track since Bjorn Gulden took over as CEO. “The brand’s heat is increasing. This can also be seen from the fact that there are fewer discounted products currently,” he evaluated.
Adidas expects its core business operations – excluding Yeezy – to improve this year, with at least a 10% growth in the second half of the year. The company expects the Chinese market to rebound more strongly, with sales increasing by double digits after an 8% increase in 2023.
In contrast, the North American market is forecasted to continue weakening, with sales expected to decline by about 5% this year. Lower demand and high inventory have weighed on business operations there since last year. Adidas reported a 21% decrease in sales in Q4 and a 16% decrease for the whole year in North America.
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Source: Vietnam Insider