Adidas Surprises Analysts with Q4 Growth, but Stock Takes a Dip: What’s Next for the Sportswear Giant?

Adidas (GER:ADS), the German sportswear titan, recently unveiled its fourth-quarter sales figures, revealing a growth trajectory that managed to surprise analysts.

The retailer's decision to clear its remaining Yeezy stock helped propel revenues upward, resulting in a 19% increase—landing at €5.97 billion ($6.34 billion) for the quarter. This figure comfortably surpassed the expectation of €5.72 billion set by analysts at LSEG.

In a stark contrast to the previous year's performance, where the company faced a hefty loss of €377 million, Adidas reported a modest operating profit of €57 million for the fourth quarter. However, despite these encouraging figures, the stock took a slight hit, dropping 2.6% just after markets opened on Wednesday.

Over the entire fiscal year, sales climbed to €23.7 billion at currency-neutral rates, a 12% rise that again outstripped the anticipated €23.5 billion. Operating profit totaled €1.34 billion, exceeding projections of €1.27 billion. These outcomes were not only better than forecasts but also surpassed Adidas' own guidance from October, which anticipated a 10% revenue growth and an operating profit of around €1.2 billion.

CEO Bjorn Gulden expressed optimism regarding the results, stating they were “much better than we had expected.” He acknowledged the strides Adidas has made, while also suggesting that more work lies ahead: “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.”

Looking forward, he reiterated that the firm is well-positioned for the upcoming year, anticipating modest growth in currency-neutral sales and an operating profit boost to between €1.7 billion and €1.8 billion in 2025.

Despite the positive performance, Adidas does face several challenges, specifically within the North American market where sales dipped by 1.6% in 2024. This decline is attributed to the fallout from the discontinuation of the Yeezy sneaker line after the end of its partnership with Ye, who made headlines for his controversial remarks in 2022. The company reported that it successfully sold off the last of the Yeezy inventory in the fourth quarter.

Analyst Yanmei Tang from Third Bridge pointed out potential hurdles ahead, such as the fading glory of the Yeezy brand and the absence of significant sporting events to boost sales. Although Adidas has seen a resurgence in lifestyle footwear, analysts think that the peak of trends associated with its Terrace line, including Samba and Gazelle, may have already passed in key markets like Europe.