adidas (ADS) Q3 2024 earnings summary

Executive summary

• Q3 2024 delivered 10% currency-neutral revenue growth, with underlying business (excluding Yeezy) up 14% and strong demand across all markets and categories.

• Gross margin improved by 2.0 percentage points to 51.3%, the highest in several quarters, supported by favorable product mix and lower costs.

• EBIT/operating profit rose to €598 million, up nearly 50% year-over-year, with EBIT margin at 9.3%, and net income for Q3 at €469 million, EPS up 75%.

• Strong performance across all regions, with Europe, LATAM, and emerging markets leading growth, and robust product launches and collaborations.

• Inventories at €4.5 billion support continued double-digit top-line growth, with disciplined inventory management.

Financial highlights

• Q3 net sales reached €6.438 billion, up 7% reported and 10% currency-neutral; gross profit up 12% to €3.301 billion, gross margin at 51.3%.

• EBIT/operating profit at €598 million (9.3% of net sales), up from €409 million (6.8%) in Q3 2023.

• Net income from continuing operations was €469 million, up 73% year-over-year; basic EPS rose 75% to €2.44.

• Cash and cash equivalents increased 87% to €1,781 million; adjusted net borrowings reduced by €1.0 billion.

• Inventories decreased 7% to €4.524 billion as of September 30, 2024.

Outlook and guidance

• Full-year 2024 currency-neutral revenue growth expected at around 10%, with operating profit guidance raised to ~€1.2 billion.

• Remaining Yeezy inventory expected to be sold at cost with no further profit contribution.

• Gross margin expected to remain in the 50%-52% range; continued heavy investment in sales and marketing.

• Significant FX headwinds anticipated.