Sports apparel brand adidas has disclosed a net loss from continuing operations of €58m for FY2023 compared with a net income of €254m recorded in FY2022.
The loss reflects an extraordinarily high tax rate, which has also led to a basic and diluted loss per share from continuing operations of €0.67 against earnings per share of €1.25 in FY2022.
In terms of revenue, the company saw a 5% decline to €21.43bn from €22.51bn in 2022.
The decrease includes more than €1bn in negative translation impacts due to unfavourable currency movements, a trend expected to persist in 2024.
Despite challenges, including the significant impact of the Yeezy brand, currency-neutral footwear sales increased by 4% in FY2023.
But apparel revenues did not fare as well, dropping 6% on a currency-neutral basis.
On a positive note, direct-to-consumer revenues grew by 3%, with Adidas' own retail stores experiencing a 12% surge, while e-commerce business declined 5% due to the Yeezy impact.
Gross margin saw a slight improvement, increasing by 0.2 percentage points to 47.5% in 2023, driven by a more favourable business mix and reduced freight costs.
Adidas recorded an operating profit of €268m, a significant drop from €669m in 2022, resulting in an operating margin of 1.3%.
Adidas CEO Bjørn Gulden said: “Although by far not good enough, 2023 ended better than I had expected at the beginning of the year. Despite losing a lot of Yeezy revenue and a very conservative sell-in strategy, we managed to have flat revenues.
“We expected to have a substantial negative operating result but achieved an operating profit of €268m. With a very disciplined go-to-market and buying process, we reduced our inventories by almost €1.5bn. With the exception of the US, we now have healthy inventories everywhere.”
Looking ahead to FY2024, Adidas anticipates a mid-single-digit rate increase in currency-neutral revenues, assuming the remaining Yeezy inventory to be sold at cost.
The underlying Adidas business is projected to grow at a high-single-digit rate with an operating profit of €500m.
In January 2024, Adidas established a global capacity centre in the Indian state of Tamil Nadu, the Economic Times reported.
