Adidas gains after strong Q2, raised full-year guidance
Investing.com - Adidas (OTC:ADDYY) stock rose Wednesday after the German sportswear giant lifted its full-year guidance for the second time this year, having posted strong second-quarter numbers earlier this week.
At 07:55 ET (11:55 GMT), Adidas stock rose 2.8% to €235, up almost 28% year-to-date.
Operating profit for 2024 is now forecast at around €1 billion (€1 = $1.0936), up from previous guidance of around E700 million and double its expectations earlier this year, Adidas said.
This followed the company saying its second-quarter sales rose 9% from a year earlier to €5.82 billion, ahead of analysts' average forecast of €5.58 billion, according to LSEG data.
That said, its gross margin was 50.8% in the quarter, below last year's 50.9% and expectations for 51.4%, damped by the reduced Yeezy business from 2023 levels.
“Within its guidance, the company assumes the sale of the remaining Yeezy inventory during the remainder of the year to occur on average at cost. This would result in additional sales of around €150 million and no further profit contribution during the remainder of the year,” Adidas said, in a statement.
“For us, the sales beat is the most notable aspect of the results (recent beats have been more gross margin/opex driven),” said analysts at JPMorgan, in a note. “Evidence, in our view, of the strength of underlying brand momentum (which, up until now, has been masked by various factors in reported figures) and the success of the organisational and strategic changes made over the last year (as well as a small contribution from recent football events).”
“In the context of these results, as well as given recent evidence of a strong exit rate and ongoing favourable gross margin trends, the upgraded FY24 guidance strikes us as conservative,” the U.S. bank added.
JPMorgan increased its FY24 EBIT estimate by 11 % to €1,175m and outer years by 1%, while lifting its Dec-25 price target to €260 from €250.
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