adidas (ADS) Q3 2024 earnings summary

Executive summary

• Q3 2024 delivered 10% currency-neutral revenue growth, with underlying business (excluding Yeezy) up 14% year-over-year, driven by strong product launches and global sports events.

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

• Operating profit (EBIT) rose 46% to €598 million, with an EBIT margin of 9.3%, and net income up 73% to €469 million; basic EPS increased 75% year-over-year to €2.44.

• Strong performance across all regions and categories, with Europe, LATAM, and emerging markets leading growth.

• Inventories at €4.5 billion support continued double-digit top-line growth, and cash and equivalents increased 87% to €1.8 billion.

Financial highlights

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

• Gross margin at 51.3% (up 2.0pp year-over-year); operating margin at 9.3% (up 2.5pp year-over-year).

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

• Operating working capital as % of net sales decreased to 20.6%, reflecting strong balance sheet discipline.

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

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 to be sold off with no further profit contribution expected in Q4.

• Continued investment in sales and marketing planned, with double-digit growth targeted for 2025 and beyond.

• Gross margin target for 2026 set at 50%-52%.

• Guidance reflects conservative approach due to FX headwinds and seasonally weaker Q4.