Adidas stock soars after the sportswear giant reported strong second-quarter results and raised its full-year guidance for the second time this year. The company's impressive performance in Q2 and optimistic outlook for the rest of the year have sparked investor enthusiasm, pushing the stock to its highest levels in over two years.
Key Takeaways
Adidas Stock Soars: Adidas stock rose 2.8% to €235, up nearly 28% year-to-date, following strong Q2 results and upgraded full-year guidance.
Strong Q2 Performance: Adidas reported a 9% increase in second-quarter sales, reaching €5.82 billion, surpassing analysts' forecasts and driven by the popularity of its terrace Originals franchises.
Upgraded Full-Year Guidance: The company raised its operating profit forecast for 2024 to around €1 billion, up from previous estimates, marking the second guidance upgrade this year due to continued sales momentum and operational efficiencies.
Strong Q2 Performance Drives Adidas Stock Soars
Adidas Exceeds Q2 Expectations
Adidas reported a 9% increase in second-quarter sales, reaching €5.82 billion, surpassing analysts' average forecast of €5.58 billion. The robust sales performance was driven by strong demand for the company's popular products, including the terrace Originals franchises like Samba and Gazelle, which have gained significant traction among U.S. consumers.
The company's operating profit for 2024 is now forecasted at around €1 billion, up from the previous guidance of around €700 million and double its expectations earlier this year. This positive revision reflects the company's confidence in its ability to maintain strong sales momentum and improve operational efficiencies.
Upgraded Full-Year Guidance
Following the strong Q2 performance, Adidas has updated its full-year guidance, projecting an operating profit of around €1 billion for 2024, up from the previous forecast of around €700 million. This marks the second time this year that the company has raised its full-year outlook, highlighting its positive trajectory.
Despite the impressive sales figures, Adidas' gross margin for the quarter came in slightly below expectations at 50.8%, compared to 50.9% last year and the anticipated 51.4%. The reduced margin was partly due to the diminished Yeezy business from 2023 levels. However, the company remains optimistic about the potential for further sales from the remaining Yeezy inventory, which it expects to sell at cost.
Market Reaction and Analyst Insights
Adidas' strong Q2 performance and upgraded full-year guidance have been well-received by the market, with the stock rising 2.8% to €235, up nearly 28% year-to-date. Analysts at JPMorgan noted that the sales beat was the most notable aspect of the results, indicating the underlying strength of the Adidas brand and the success of strategic changes made over the past year.
JPMorgan analysts also highlighted that the upgraded FY24 guidance appears conservative given the strong exit rate and ongoing favorable gross margin trends. They increased their FY24 EBIT estimate by 11% to €1,175 million and adjusted their December 2025 price target to €260 from €250.
Looking Ahead
Adidas' strong performance in Q2 and the positive revisions to its full-year guidance suggest that the company is well-positioned for continued growth. The popularity of its terrace Originals franchises and the anticipated sale of remaining Yeezy inventory are expected to contribute to the company's success in the coming quarters.
As Adidas stock soars, investors and analysts will be closely watching the company's performance in the second half of the year and into 2025, particularly as it navigates potential challenges and continues to build on its recent successes.
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