Sportswear giant Adidas has reported its first quarter results for 2023, announcing a 1 percent decline in revenues from EUR5.3 billion (USD5.85 billion) to EUR5.27 billion (USD5.81 billion).
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Adidas, which discontinued its Yeezy business in an effort to distance itself from Kanye West, said the move weighed on its revenues during the quarter, representing a drag of around EUR400 million (USD441 million) mainly across the North America, Greater China and EMEA regions.
The company also looked to reduce high inventory levels in North America and Greater China.
Footwear revenues, however, grew 1 percent during the quarter, a reflection of the brand’s increased momentum in performance categories football, running, outdoor and tennis. Driven by growth in football, accessories grew 8 percent.
Despite mainstream popularity for athleisure styles, in particular the demand for Adidas’ Samba, Gazelle, and Campus franchises, lifestyle revenues were down during the quarter.
The launch of product innovations such as the jerseys for the FIFA Women’s World Cup 2023 and the new iteration of the iconic Predator football boot boosted performance categories’ growth at a double-digit rate.
Wholesale revenues grew 3 percent in EMEA, Asia Pacific and Latin America, despite a 7 percent decline in its direct-to-consumer revenues as e-commerce declined 23 percent. Majority of the company’s Yeezy products were sold through its own online channel.
Physical retail looks to make a comeback with Adidas’ own retail stores increasing sales by 11 percent in the first quarter.
“Q1 ended a little better than we had expected with flattish sales and a small operating profit of EUR60 million (USD66 million),” said Adidas chief executive officer Bjørn Gulden. “Sales growth excluding Yeezy was 9 percent. [We also saw] great double-digit growth in Latin America and Asia-Pacific, and slight growth in EMEA despite Russia were in line with our plan. Total revenues in Greater China were still down 9 percent, but we achieved double-digit sell-out growth.”
“We are very happy to see our Performance categories continue to develop well and grow strongly. The decline in lifestyle and the loss of Yeezy are of course hurting us. But also here we see some positive developments: The Terrace segment is doing very well in all markets and we have started to scale up volumes for our Samba, Gazelle and Campus franchises.”
Gulden also remarked on Adidas’ recent partnership launches with Bad Bunny, Ronnie Fieg/Kith, and Gucci, which he said “performed great.”
“We just need some time. 2023 will be a bumpy year with disappointing numbers, where maximising our short-term financial results is not our goal. It is a transition year to build a strong base for a better 2024 and a good 2025 and beyond,” he said.