Adidas shares rise 8% after first-quarter profit hike, improved outlook

Shares of Adidas jumped 8.2% on Wednesday after the company unexpectedly raised its full-year guidance and reported a year-on-year profit increase in the first quarter.

The German sportswear company said that it now expects currency-neutral revenues to increase at a mid-to high-single-digit rate in full-year 2024, compared with a previous projection of growth near a mid-single-digit rate.

Operating profit for the year is now expected to reach around 700 million euros ($745 million), Adidas said in its unscheduled trading update published late on Thursday. It had previously forecast operating profit near 500 million euros.

Adidas has been selling off its loss-making Yeezy inventory since breaking ties with Ye, the rapper formerly known as Kanye West. The firm said it now expects the sale of the rest of the Yeezy inventory during the remainder of the year to result in additional sales of around 200 million euros.

The company also said its first-quarter operating profit rose to 336 million euros, up from 60 million in the same period of last year, according to preliminary figures.

Unfavorable currency effects are expected to weigh "significantly" on Adidas' profitability this year and impact both reported revenues and gross margin development, the firm said in its report.

Adidas underwent a transition year in 2023 after it lost revenue from the Yeezy sales. Back in March, CEO Bjørn Gulden said that he expected some growth in the first quarter, which will strengthen in the second half of this year.

The underlying sales growth from the Yeezy products confirms the "rapidly accelerating momentum" of the Adidas brand, according to UBS analysts. The guidance and continued expectation of better sales growth throughout the year will be