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Adidas (ADDYY) Gains on Orders for Defunct Yeezy Inventory
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In October 2022, Adidas AG (ADDYY - Free Report) stopped selling Yeezy shoes from its then partnership with Ye, after the rapper, formerly known as Kanye West, had come into the headlines having made a series of antisemitic comments. Discontinuing this profitable sales line had pushed the company into forecasting an operating loss of $770 million for 2023. It also hit the company’s first-quarter 2023 sales by $440 million.
This forecast was made before the footwear and accessories giant decided to sell its leftover Yeezy inventory. On Monday, however, per a report in the Financial Times, Adidas got orders worth more than $565 million for 4 million pairs of unsold Yeezy shoes. With an order backlog this big, the company expects to bring down its operating loss for the year to $498 million. It is being deterred from writing off other unsold stock from the now defunct product line.
This development also comes as a big nod of confidence for newly appointed CEO Bjorn Gulden, who has a mandate of turning the company’s fortunes around. It is likely that the company will still report its first annual operating loss in over three decades because of the canceled product line. However, if it is able to sell off its inventory, as has been reported, the impact will be muted. On Monday, the stock jumped 2.5%.
Adidas has also pledged to donate some of the proceeds from the sales to organizations fighting antisemitism and racism. This charitable move is also likely to raise its stock as an ESG brand and attract a young and liberal customer base.
Financials Show ADDYY is on the Right Track
Adidas is part of the Zacks Shoes and Retail Apparel industry. Currently, Zacks analysts estimate a $1.26 loss per share for the year for the company, suggesting a 290.9% decline from the year-ago earnings of 66 cents. However, for 2024, our analysts project earnings of $2.1 per share, implying growth of 268.6%. Similarly, while for 2023, the projected revenues of $22.9 billion suggest a loss of 3.2%, for 2024, the revenues are expected to go up to $25.5 billion, indicating 11.2% growth.
The Zacks Consensus Estimate for its current-year earnings has improved 15.4% over the past 60 days. Year to date, Adidas’ share price has risen 45.1% against a 3.4% decline of the Shoes and Retail Apparel industry.
Zacks Rank & Competition
Adidas, which currently carries a Zacks Rank #1 (Strong Buy), justifies its rating with a strong outlook for 2024, even as its financials might be a bit shaky this year. It is far better placed, for example, than Carter's, Inc. (CRI - Free Report) , which will also be reporting a loss this year, per projections. Carter’s currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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Adidas (ADDYY) Gains on Orders for Defunct Yeezy Inventory
In October 2022, Adidas AG (ADDYY - Free Report) stopped selling Yeezy shoes from its then partnership with Ye, after the rapper, formerly known as Kanye West, had come into the headlines having made a series of antisemitic comments. Discontinuing this profitable sales line had pushed the company into forecasting an operating loss of $770 million for 2023. It also hit the company’s first-quarter 2023 sales by $440 million.
This forecast was made before the footwear and accessories giant decided to sell its leftover Yeezy inventory. On Monday, however, per a report in the Financial Times, Adidas got orders worth more than $565 million for 4 million pairs of unsold Yeezy shoes. With an order backlog this big, the company expects to bring down its operating loss for the year to $498 million. It is being deterred from writing off other unsold stock from the now defunct product line.
This development also comes as a big nod of confidence for newly appointed CEO Bjorn Gulden, who has a mandate of turning the company’s fortunes around. It is likely that the company will still report its first annual operating loss in over three decades because of the canceled product line. However, if it is able to sell off its inventory, as has been reported, the impact will be muted. On Monday, the stock jumped 2.5%.
Adidas has also pledged to donate some of the proceeds from the sales to organizations fighting antisemitism and racism. This charitable move is also likely to raise its stock as an ESG brand and attract a young and liberal customer base.
Financials Show ADDYY is on the Right Track
Adidas is part of the Zacks Shoes and Retail Apparel industry. Currently, Zacks analysts estimate a $1.26 loss per share for the year for the company, suggesting a 290.9% decline from the year-ago earnings of 66 cents. However, for 2024, our analysts project earnings of $2.1 per share, implying growth of 268.6%. Similarly, while for 2023, the projected revenues of $22.9 billion suggest a loss of 3.2%, for 2024, the revenues are expected to go up to $25.5 billion, indicating 11.2% growth.
The Zacks Consensus Estimate for its current-year earnings has improved 15.4% over the past 60 days. Year to date, Adidas’ share price has risen 45.1% against a 3.4% decline of the Shoes and Retail Apparel industry.
Zacks Rank & Competition
Adidas, which currently carries a Zacks Rank #1 (Strong Buy), justifies its rating with a strong outlook for 2024, even as its financials might be a bit shaky this year. It is far better placed, for example, than Carter's, Inc. (CRI - Free Report) , which will also be reporting a loss this year, per projections. Carter’s currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.