adidas ups FY guidance again after better-than-expected Q3 adidas has increased FY guidance for the third time this year and is now expecting FY24 currency-neutral revenues to grow c10%, versus previous guidance of high-single-digit growth. Operating profit is now guided to be around €1.2bn (previously c€1.0bn), having started the year at €500m. The company assumes the remaining Yeezy inventory sold in Q4 is sold at cost (zero profit contribution) and would generate sales of €50m Q3 revenues grew 7% to €6,438bn or +10% at constant currency (Q2 +11% CC; Q1 +8% CC). Excluding Yeezy sales in both years, Q3 revenues were up 14% at constant currency (Q2 +16% which contained the Euros, Copa America Football and Paris Olympics). FX remains a headwind. Gross margin increased 2 percentage points to 51.3%. Encouraging news for JD Sports adidas’ strong accelerating brand momentum through FY24 contrasts with NIKE’s fortunes. NIKE recently reported Group revenues down 9% CC for the 3 months to end of August, and withdrew its FY guidance following a change of management. Helped by better innovation, sentiment continued to improve towards adidas with its recovery coming through faster than expected. A stronger and better performing adidas is good news for industry sentiment and wholesale partners like JD Sports. From a JD Sports shareholder’s perspective, short term growth concerns over demand volatility and NIKE’s underperformance is weighing on JD’s valuation (CY25E PE 8.5x), despite JD’s recent 1H results showing the strength of its multi-brand offer. Despite industry weakness, JD still delivered good LFL growth in North America (JD Q2 LFL +5.7% to the end of July) and Europe (JD Q2 LFL +3%), as well as reiterating its FY guidance. We believe JD’s current valuation does not reflect its strong global leadership position or its future growth opportunities. Next news from JD is a Q3 trading update up on 21st November. Comps get much easier in 2H. Further good momentum should help to reduce concerns over NIKE’s continued underperformance. Reiterate our BUY on JD Sports.