Adidas confirms 2024 outlook, Yeezy hurts Q2 North American sales

By Linda Pasquini and Paolo Laudani

(Reuters) -Adidas confirmed its full-year guidance and forecast-beating second quarter results on Wednesday, though it said revenue in North America fell due to remaining stock from former designer partner rapper Ye's Yeezy line.

The German sportswear brand hiked its 2024 guidance on July 16 and reported strong quarterly results, helped by the popularity of its retro-style Samba and Gazelle sneakers, and weaker sales at rival Nike.

It said on Wednesday that sales of jerseys related to the UEFA Euro Cup and Copa America soccer tournaments also boosted the quarter, driving 6% growth in its apparel business.

Currency-neutral sales in North America - Adidas' second-biggest market behind Europe - fell by 8% to 1.3 billion euros ($1.51 billion) in the April to June period. Excluding Yeezy, underlying sales grew 2% versus the same quarter last year, the company said on a media call on Wednesday.

It anticipates some growth in the United States for the second half of the year but said that will still lag behind other markets, including Europe.

"The decline was solely related to the significantly smaller Yeezy business," the company said.

CEO Bjorn Gulden has sought to clear Yeezy stock left unsold following Adidas' bruising break-up with rapper Kanye West, who goes by Ye, while the group strives to boost its brand through its popular retro styles.

Adidas said its overall inventories shrunk 18% to 4.5 billion euros as of June 30, compared to a year earlier, though CFO Harm Ohlmeyer said it expected them to rise again in the next couple of quarters, as the company gears up for growth.

The rise in growth from the previous quarter in footwear and apparel as well as performance products indicates that momentum is spreading to other parts of the business from Adidas' classic shoe lines, said Cristina Fernandez, analyst at Telsey Advisory Group.

"The broad-based strength globally across regions and categories was a highlight," Fernandez added.

Adidas shares edged up 0.6%.

In Europe, Adidas' currency-neutral sales rose 19% from a year earlier to 1.9 billion euros in the second quarter.

Adidas still aimed to achieve a 10% operating profit margin target in 2026, it said.

($1 = 0.9244 euros)

(Reporting by Linda Pasquini and Paolo Laudani in Gdansk; Editing by Milla Nissi and Emelia Sithole-Matarise)