Adidas has exceeded expectations in its fourth-quarter sales, fueled by the sale of its remaining Yeezy stock, but the company has cautioned about slower growth in 2025. Here’s a breakdown of the latest performance and what lies ahead for the German sportswear giant.
Adidas Surpasses Expectations in Q4, Boosted by Yeezy Sell-Off
Adidas has had a strong finish to 2024, reporting a 19% increase in fourth-quarter revenues, totaling 5.97 billion euros ($6.34 billion), well above the 5.72 billion euros forecasted by analysts. This uptick was primarily driven by the sale of the remaining Yeezy stock, which had been a major asset before the brand was scrapped due to its fallout with former partner, Kanye West.
In contrast to last year’s 377 million euro loss, Adidas reported a 57 million euro operating profit in the final quarter of 2024. These results are seen as a turnaround, showcasing the company’s recovery despite the challenges faced with Yeezy’s departure and other market uncertainties.
However, Adidas shares dipped by 2.6% after the results were announced, signaling that investors are cautious about what lies ahead for the company.
Full-Year Sales Report: Growth Ahead of Expectations
Looking at the full year, Adidas reported 12% growth in sales at currency-neutral rates, reaching 23.7 billion euros—beating the anticipated 23.5 billion euros. Its operating profit for the year also exceeded expectations, totaling 1.34 billion euros compared to the forecast of 1.27 billion euros.
Despite the positive numbers, CEO Bjorn Gulden acknowledged that Adidas has a long way to go before reaching its long-term goals. In his statement, Gulden said, “Although we are not yet where we want to be long term, it was a very successful year that confirmed the strength of the Adidas brand, the potential of our company, and the fantastic job our teams are doing.”
A Bright but Cautious Outlook for 2025
Looking ahead, Adidas forecasts high-single-digit sales growth in 2025, with operating profits expected to rise to between 1.7 billion and 1.8 billion euros. Gulden remains optimistic about the company’s trajectory, saying, “For 2025 we are in very good shape… With products that we think are on trend and the attitude of being agile and more local, I cannot see why we should not be successful.”
However, the company acknowledges that macroeconomic uncertainty may present challenges. As Adidas tries to capitalize on emerging trends and innovate in the footwear space, the absence of big sporting events and the phaseout of Yeezy could weigh on growth in the upcoming year.
North America Struggles and the End of Yeezy
Despite the strong finish to 2024, Adidas continues to face challenges in North America, where sales fell by 1.6% at currency-neutral rates. The loss of the Yeezy line, once a major revenue generator for Adidas, has been a significant setback. The company was forced to end its partnership with Kanye West in 2022 after his controversial remarks, and as a result, Adidas was left with a massive inventory of unsold Yeezy products.
In response, Adidas sold off its remaining Yeezy inventory during the fourth quarter, helping to drive revenue. The sale of Yeezy stock had been a crucial part of the company’s strategy to clear out lingering merchandise, but the end of the brand leaves Adidas with a gap in its product lineup, especially in the high-end sneaker market.
The Road Ahead: Innovation and Competition
As Adidas moves forward, it is clear that the company needs to focus on innovation to maintain growth. Yanmei Tang, an analyst at Third Bridge, pointed out that while Adidas has managed to regain traction with lifestyle footwear—particularly with its popular Samba, Gazelle, and Terrace lines—this trend may be nearing its peak in major markets like Europe. Adidas is now focusing on newer silhouettes such as the SL 72 and the potential revival of the Superstar line. However, these efforts might not be enough to fully compensate for the slowdown in the Terrace trend.
Additionally, Adidas faces increasing competition in the sportswear market. While the company has been slowly gaining ground against rival Nike, it still lags behind with an 8.9% market share compared to Nike’s 14.1%. More troubling is the rise of newer brands like On, Hoka, and New Balance, which have been making significant inroads, taking away market share from established giants like Adidas and Nike.
Can Adidas Keep the Momentum Going?
Adidas’ fourth-quarter results were undoubtedly a win for the company, especially considering the challenges it faced from the Yeezy fallout and North American sales struggles. The company showed that it can still drive growth, but much will depend on how effectively it can pivot away from Yeezy and find fresh avenues for innovation in a rapidly evolving market.
As the sportswear giant looks ahead to 2025, it is clear that agility, localization, and staying on-trend will be key to its ongoing success. If Adidas can stay ahead of the competition and continue to innovate, it may yet manage to reclaim its position as a leader in the global sportswear market.
