What happened?
Adidas IR held a group sell-side ''quarterly logic check'' call ahead of its Q1 results, which it is due to report on 29 April. We highlight that there has been no change to full-year guidance and that the purpose of the event was to provide a re-cap of previously published comments. There was no new commentary on Q1 trends or profitability.
BNPP Exane View
There was no new commentary from Adidas but we remain confident in the investment case, as set out in Why there''s more to play for (12 February) and more recently in Lacing up for the full year (5 March) and On the road with Adidas (20 March). We reiterate our Outperform.
Main topics
. Q1 cFX sales growth: Q1 2024 sales growth was c.+5% on a constant currency ex-Yeezy base (+8% including Yeezy). Adidas confirmed positive order books for Q1-Q3 across different markets and categories. It is confident in achieving double-digit growth in North America, high single-digit growth in Europe, and success with its local-for-local strategy in China. Despite consistent performance, Adidas reiterated industry volatility such as traffic and conversion in the US.
. Yeezy impact on Q1: Q1 2024 included EUR 150m of Yeezy sales, +3ppts of constant currency sales growth, +70bps contribution to gross margin and EUR 50m of operating profit. On an ex-Yeezy base Q1 2024 constant currency sales growth was c.+5%, gross margin of c.50.5% and operating profit of EUR c.290m.
. Q1 gross margins: Adidas remains confident that gross margins can further improve in 2025, albeit more moderately year-on-year than 2024. Drivers are lower product costs and less discounting. However, FX uncertainty remains with around 80% hedged for 2025.
. Q1 profit expectations: Adidas reiterated its 2025 guide of EUR 1.7-1.8bn. It has ambitions to grow higher than that but noted that the external environment remains less certain. It expects to maintain operating leverage throughout 2025. It does not expect a major impact from...
