BERLIN — In an unexpectedly positive third quarter, during which German sportswear giant Adidas saw 10 percent growth in sales, the company also closed its turbulent chapter on the Yeezy line.
Adidas said it reached a final settlement with Ye, formerly Kanye West, following the end of its collaboration in 2022 due to the American musician’s increasingly erratic behavior and offensive comments.
The collection had been highly profitable for Adidas, with some sector experts suggesting it could have been generating around 40 percent of the company’s annual profits due to the line’s favorable pricing, and the debacle has dragged on the sportswear-maker’s results since then.
Over the third quarter, sales of the remaining Yeezy stock brought in 200 million euros, the German company said. Over the last quarter of the year, Yeezy is likely to bring in another 50 million euros, after which the line will finish.
At an online press conference, during which the financial results were announced, Adidas chief executive officer Bj?rn Gulden refused to be drawn on specifics but said that there had been many disagreements and much tension between the two parties, as well as claims and counter claims filed by lawyers on both sides.
These have all now been settled out of court, Gulden noted. “To be really honest with you, I don’t even know how many claims there were,” he told journalists, sounding slightly frustrated. But that’s no longer relevant, he said, because the chapter has been closed. “And I think that’s all we can say.”
The settlement is unlikely to ever be made public, but Gulden stated that no money changed hands as a result of the legal wrangling.
“With the settlement, there were no payments,” the Adidas boss disclosed. “Of course, in the 10 years that they [Adidas and Ye] worked together, there were payments. But the settlement itself, there were no payments.”
Adidas’ chief financial officer Harm Ohlmeyer added that over the past two years, Adidas has donated almost 250 million euros of the Yeezy proceeds to its foundation, set up to support organizations fighting antisemitism and other forms of prejudice.
“There is no plan to find a new Kanye West, or Ye,” Gulden noted. “Because that doesn’t exist. And I think, if you look at both our top line and our gross margin, we have already replaced that business. We are also very, very happy with the partnerships we have in sport, in fashion and in music. There will be new partners and new possibilities but right now, we are very happy with what we have.”
One of the product groups that has helped replace Yeezy are Adidas’ retro “terrace” footwear models. The category into which they slot — Adidas Originals, Basketball and Skateboarding — grew 20 percent over the third quarter.
Between July and September this year, Adidas announced sales growth of 10 percent on a currency-neutral basis. Sales between July and September totaled 6.44 billion euros, versus 5.99 billion euros in the same prior-year period.
And those numbers were helped by the Samba, Gazelle, Campus and Speziale shoes, which continue to trend around the world.
Gulden expressed satisfaction with the product mix that had brought Adidas good third-quarter results. “Double-digit growth in both Lifestyle and Performance shows the currently good ‘balance’ in our business,” he stated.
Adidas footwear revenues make up just under two-thirds of the company’s business and rose 14 percent on a currency-neutral basis. Apparel, which makes up 34 percent of Adidas’ total business, was up 5 percent and accessories — a sector that had been struggling over past quarters — also returned to growth, with an increase of 10 percent.
In terms of sales territories, Adidas was doing better than expected in the important North American market, Guden pointed out.
There sales fell 7 percent in currency-neutral terms to 1.36 billion euros but, as the brand said in a statement, “the decline [in North America] was solely related to the significantly smaller Yeezy business. Excluding Yeezy, revenues in North America increased versus the prior year.”
“The underlying Adidas business was positive although only with plus 1 [percent],” Gulden conceded. “America is the most challenging market for a European brand and as we have said before, with the turnaround time, when it gets to brand heat, the U.S. market is lagging six to nine months behind. That’s especially true for wholesale, where trade was just not buying into our business as much as the rest of the world.”
However, that is now changing, he noted. “We have posted two quarters in a row with business slightly up. With our order books for fourth quarter and first quarter, we see the retailers are happy with our brand and we think we will have a strong fourth quarter in the U.S. We feel like we’ve turned a corner and we’re optimistic about our mid-term future there,” he concluded.
Adidas also saw something of a recovery in Greater China, with revenues rising 9 percent in currency-neutral terms to 946 million euros. This was the best result Adidas has had there in almost three years.
“We are taking market share there, we are more profitable and we feel we’re on a good way there, compared to market conditions,” Gulden said.
He predicted that Adidas might even see 11 percent growth in Greater China by the end of the fourth quarter because the last three months of the year there, which includes the shopping day “11/11,” were significant for sales.
By the end of the year, Adidas will also have opened a further 300 stores in smaller Chinese cities, the brand’s boss added.
Adidas revenues increased 18 percent on a currency-neutral basis in Japan and South Korea, with sales of 361 million euros.
Meanwhile in Europe, its largest market, Adidas brought in 2.15 billion euros, up 18 percent in currency neutral terms.
Similar growth rates came from the Emerging Markets category, with sales there totaling 910 million euros, a 16 percent currency-neutral increase. Emerging markets include countries like Iraq, Bangladesh, Uzbekistan, Vietnam and Nigeria.
In Latin America, Adidas sales totaled 677 million euros in the third quarter, adding up to a 28.4 percent gain.
Gulden also addressed concerns that Adidas might not be able to keep up the current momentum.
Analysts have worries about the end of the terrace footwear trend and what impact that might have, if and when it fades away.
Gulden sketched out Adidas’s product pipeline. This will progress from the currently popular terrace shoes and the retro SL72 running shoe, to the more fashion-conscious low-profile looks that are currently gaining favor and should start to peak in the summer of 2025 — Stella McCartney recently showed her take on that for Adidas at Paris Fashion Week.
In the more distant future, there will be a new selection of more futuristic lifestyle-oriented running shoes and the reintroduction of one of the company’s bestsellers, the Superstar shoe.
Gulden also again expressed his intention to bring fashion and sports closer together.
“In general, when we combine the fashion of our brand with the performance, we call it magic,” he enthused. “And you’re going to see more of this. We’re already using our athletes on the catwalk…you’re going to see sports being a bigger part of fashion.”
Gulden wasn’t worried about a lack of upcoming mega-sports events either. This year’s so-called “summer of sport,” where several major football tournaments and the Paris Olympics and Paralympics, had helped Adidas’ third-quarter numbers.
“We are not afraid of 2025. We feel like we have momentum with the consumer that actually came a little bit quicker than we hoped,” Gulden said.
“And we feel we have a good plan for 2025,” the Adidas boss said, referring to “feedback we’re getting and also the order books for first quarter and part of second quarter [in 2025].”
As a result, Adidas raised its guidance for the third time this year. The company now expects growth of around 10 percent for the full year, versus a previous forecast of a midsingle-digit increase.
Its operating profit also increased significantly in the third quarter of 2024, rising to 598 million euros. Adidas now expects its operating profit for the year to come in at 1.2 billion euros, instead of 1 billion euros.
On Tuesday morning, Adidas shares only rose slightly because the company had shared preliminary figures earlier in the month.
Nonetheless, analysts from the likes of Baader Bank, JPMorgan, Goldman Sachs and Canadian bank RBC praised Adidas’ results and noted that earnings per share had also risen significantly. Market observers also said that, with its new guidance, Adidas was now catching up with market enthusiasm about its prospects.
