Adidas’s Q3 2024 results reveal a strong global performance for the core brand, with double-digit growth driven by strategic product launches and marketing. While North America’s total revenue declined due to the lingering impact of the Yeezy discontinuation, the underlying Adidas brand saw healthy growth in the region, signaling a positive trajectory for investors focused on long-term brand momentum and inventory management.
In a recent announcement, Adidas revealed its financial performance for the third quarter of 2024, showcasing a robust global rebound for its core brand despite ongoing complexities in the North American market. The German sportswear giant’s results indicate that strategic shifts and renewed brand momentum are taking hold, offering a clearer picture for investors keen on its long-term trajectory. These figures come as the company continues to navigate the aftermath of discontinuing its high-profile Yeezy sneaker line.
The Headline Numbers: A Global Rebound in Q3 2024
Adidas reported currency-neutral sales growth of 10% overall for the third quarter of 2024. This impressive performance was primarily fueled by the underlying Adidas brand, which saw an even stronger increase of 14% on a currency-neutral basis. This indicates a significant revitalization of the brand’s core offerings and market appeal.
The company’s profitability also saw a notable improvement. Gross margin advanced by 2.0 percentage points to 51.3%, driven by reduced product and freight costs, a more favorable product mix, and less discounting, despite persistent currency headwinds. Operating profit climbed to €598 million, a significant increase from €409 million in the prior-year period, with net income from continuing operations reaching €469 million. These figures reflect a successful execution of CEO Bjørn Gulden’s turnaround strategy, as he noted, “The third quarter was a very strong quarter for us and again better than expected,” in the official press release on October 29, 2024, as confirmed by Adidas Group.
The positive momentum led Adidas to raise its full-year guidance on October 15, 2024, now expecting currency-neutral revenues to increase by around 10% (up from a high-single-digit rate) and operating profit to reach approximately €1.2 billion (up from €1.0 billion). This revised outlook suggests confidence in continued brand strength and operational efficiency.
North America: A Tale of Two Stories
While the global picture was overwhelmingly positive, the North American market presented a more nuanced story. Overall sales in North America decreased by 7% on a currency-neutral basis during the third quarter. This decline, however, was “solely related to the significantly smaller Yeezy business,” as stated in the official report. The discontinuation of the popular Yeezy line had a substantial impact, as sales generated from parts of the remaining Yeezy inventory amounted to around €200 million in Q3 2024, significantly less than the €350 million recorded in Q3 2023.
Crucially for investors, when excluding the impact of Yeezy sales, revenues for the core Adidas brand in North America actually increased by 8% year-on-year, excluding currency movements. This growth, while weaker compared to other regions that saw increases between 10% and 21%, is a vital indicator of underlying brand health in a challenging market. The company has also adjusted pricing, with its top-selling Samba sneakers now starting at $100 on its U.S. site, up from previous prices of $90 and above, partly to offset higher U.S. tariffs, as reported by Reuters.
For investors, this bifurcated performance in North America highlights a key consideration: the overall regional revenue is still grappling with the absence of Yeezy, but the core Adidas offerings are demonstrating resilience and growth. This distinction is critical for understanding the brand’s long-term recovery in a key market.
Strategic Investments and Global Growth Drivers
Adidas’s impressive Q3 performance was broad-based, with significant growth across various categories and regions:
- Product Categories: Footwear revenues surged by 14% currency-neutral, driven by strong double-digit growth in Originals. Apparel sales were up 5%, mainly boosted by football-related products. Accessories returned to growth, increasing by 10%.
- Lifestyle and Performance: Both segments posted double-digit growth. Lifestyle saw continued success with popular franchises like Samba, Gazelle, Spezial, and Campus. Performance categories, including football, running, and training, also contributed significantly.
- Channels: Wholesale grew by 13% currency-neutral. Direct-to-Consumer (DTC) revenues increased by 7%, or 17% when excluding the Yeezy impact. E-commerce, excluding Yeezy, saw revenues jump by more than 25%.
- Regional Performance (currency-neutral sales):
- Europe: +18%
- Emerging Markets: +16%
- Latin America: +28%
- Japan/South Korea: +18%
- Greater China: +9%
The company’s CEO emphasized growth across “all regions, in all channels and now also in all product divisions,” underscoring a comprehensive brand resurgence. Significant investments in global brand campaigns, such as ‘You Got This,’ and activations around major sports events like UEFA Euro 2024, CONMEBOL Copa América, and the Olympic and Paralympic Games Paris 2024, have evidently paid off, fueling brand heat and consumer connection.
What This Means for Investors: A Long-Term Perspective
For investors, Adidas’s Q3 2024 results paint a picture of a company successfully executing its turnaround. The strong performance of the core brand globally, coupled with improved gross margins and healthy inventories at €4.5 billion, suggests a solid foundation for future growth. The challenge in North America, while notable for overall revenue, masks the positive underlying growth of the Adidas brand itself in the region, which is a critical distinction for long-term holders.
The raised full-year guidance and the strategic investments in brand building and product innovation highlight management’s confidence and a clear path forward. While the residual impact of the Yeezy discontinuation will continue to feature in reports, particularly for total revenue figures, the robust performance of Adidas’s core offerings across lifestyle and performance categories signals a strong return to relevance and profitability. Investors will be closely watching continued market share gains, particularly in the competitive North American landscape, and the effective management of currency headwinds in the coming quarters.
