Adidas Ag · XETR:ADS
Adidas — Adidas Ag Ord — FY2023 Earnings Presentation
91 slides from Adidas's earnings presentation, Feb 1, 2024
Slide 1: Full Year 2023 Results
Slide 2: 2023 Starting Point
Slide 3: Starting Point
2023 STARTING POINT PEOPLE SAID: “THERE IS NO INNOVATION” “THERE ARE NO HOT PRODUCTS AND THERE IS NO BRAND HEAT” “THERE IS NO TALENT” “YOU ARE NOT A GREAT PLACE TO WORK” “IT WILL TAKE A VERY LONG TIME TO TURN THE BUSINESS”
Slide 4: Reality
2023 REALITY
Slide 5: Reality: We Have Innovation
2023 REALITY WE HAVE INNOVATION
Slide 6: Great Innovation for the Athletes
GREAT INNOVATION FOR THE ATHLETES ADIZERO ADIOS PRO EVO 1
Slide 7: Adizero Adios Pro Evo 1 - Winning Success
AMANAL PETROS BREAKS NATIONAE-RECORD AT BERLIN MARATHON (2:94:58) F BENSON KIPRUTO WINS TOl MARATHON (2:02:16) TARIKU NOVALES BREAKS NATIONAL RECORD AT VALENCIA MARATHON (2:01:48) ; ADIZERO ADIOS PRO EVO 1 - WINNING SUCCESS
Slide 8: Terrex Agravic Speed Ultra
The Fastest Trail Shoes In Chamonix TERREX AGRAVIC SPEED ULTRA
Slide 9: Predator
PREDATOR 24
Slide 10: Predator 24 on the Pitch
ALESSIA RUSSO JUDE BELLINGHAM TRENT-ALEXANDER ARNOLD PREDATOR 24 ON THE PITCH
Slide 11: AE
AE 1
Slide 12: James Harden Vol
JAMES HARDEN VOL 8
Slide 13: Fear of God
FEAR OF GOD
Slide 14: Award Winning Products
AWARD WINNING PRODUCTS isaeticsiantrnom FAST IMPACT LUXE RUN SUPERNOVA RISE NAMED ADIDAS TERREX WINS 5 ADIZERO ADIOS PRO 3 HIGH-SUPPORT BRA NAMED —- BEST RUNNING SHOE FOR ISPO AWARDS NAMED BEST SPEED SHOE “BEST SPORTS BRA” FOR EVERY LEVEL (WOMEN’S BY WOMEN’S HEALTH RUNNER’S WORLD GEAR HEALTH) & BEST
Slide 15: Reality: Hot Products and Brand Heat
2023 REALITY WE HAVE HOT PRODUCTS AND BRAND HEAT
Slide 16: Samba - Shoe of the Year
Lf } Ff fied Gi] ACHIEVEMENT cs Ae OS, 2 )EMENT SAMBA - SHOE OF THE YEAR 2023 FOOTWEAR NEWS ACHIEVEMENT AWARDS
Slide 17: We Have the Hottest Shoes on the Street
WE HAVE THE HOTTEST SHOES ON THE STREET SCALING UP LIFESTYLE RUNNING FUTURE
Slide 18: Campus #1 Lifestyle FTW Franchise
CAMPUS #1 LIFESTYLE FTW FRANCHISE - SURPASSING COMPETITION EUROPE, JANUARY 2024 SEARCH DEVELOPMENT SEARCH DEVELOPMENT BY MONTH JAN ‘24 VS. DEC ‘23 5.0M = \ Campus 4.5M \ Competitor A -21.3PP Samba +23,8PP 4.0M Gazelle +17.4PP 3.5M ‘ampus Competitor A -20.7PP 3.0M I% Competitor A Competitor B -19.4PP
Slide 19: Samba Press Coverage
| Haven't Bought “Fashion” Trainers For 10 Years, But This Trend How the Adidas Samba Changed Fashion and Sneakers in 2023 and Became the FNAA Shoe of the The Devil wears Sambas: Chioma Nnadi made editor of British rere] Wait, does everyone own Adidas Gazelles now? ®
Slide 20: Relaunch SL72
RELAUNCH SL72 EXTENDING OUR TERRACE STORY INTO RUNNING eS IN OUR NETWORK WITH OUR RESULTING INORGANIC AND FURTHER PARTNERS PICK-UP ACTIVATIONS
Slide 21: Originals Lo Profile
ORIGINALS LO PROFILE FUELING THE NEXT CLASSICS TREND
Slide 22: Lo Profile - A New Classics Silo for Her
LO PROFILE - A NEW CLASSICS SILO FOR HER UTILIZING OUR ARCHIVE TRACK & FIELD SPECIALIST SPORTS a ee TOKYO eZ TAEKWONDO ADIRACER RASANT
Slide 23: From Hero to Halo
FROM HERO TO HALO SUCCESS IN SPORTSWEAR UP NEXT NEW SS25 NEW SS25 /~ * SPEZIAL TAKEDOWN NEW FW25 _ SUPERSTAR v VL COURT Mi GRAND COURT Mi ADVANTAGE TAKEDOWN
Slide 24: Z.N.E - New and Improved Sportswear Apparel
Z.N.E - NEW AND IMPROVED SPORTSWEAR APPAREL
Slide 25: Blake Lively Wearing Three Stripes at Super Bowl
«hl , one Ce VOGUE shion highlights from the 2024 Super Lively Brought Athleisure to the Super Bowl in an Adidas Bowl ‘Tracksuit and Major Curls Blake Lively Channels Her Inner Sporty Spice at the Super Bow! 2024 il BLAKE LIVELY WEARING THREE STRIPES AT SUPER BOWL 2024
Slide 26: Power of Three
Slide 27: Originals Campaign
ORIGINALS CAMPAIGN po “" . ORIGINALS WE GAVE THE WORLD AN ORIGINAL YOU GAVE US A THOUSAND BACK
Slide 28: Bringing the Campaign to Life Around the World
BRINGING THE CAMPAIGN TO LIFE AROUND THE WORLD
Slide 29: Reality: We Have the Talent
2023 REALITY WE HAVE THE TALENT
Slide 30: The Best Athletes
y PTIGiST. aan LAMINE van THE BEST ATHLETES
Slide 31: Most Relevant Culture Partners
JENNA EDISON SE race ORTEGA Cl Pa WALES BONNER MOST RELEVANT CULTURE PARTNERS
Slide 32: And the Best People
Slide 33: Reality: Best Place to Work
2023 REALITY WE HAVE THE BEST PLACE TO WORK
Slide 34: Best Places to Work
PORTLAND HERZOGENAURACH BEST PLACES TO WORK
Slide 35: adidas Team - A Global Team
ADIDAS TEAM - A GLOBAL TEAM >59,000 EMPLOYEES >180 NATIONALITIES GLOBALLY 51% WOMEN 49% MEN WOMEN IN LEADERSHIP 39.6% WOMEN IN LEADERSHIP. < AND ABOVE GLOBALLY) 2025 hima I LE RD=1 ADIDA : 40% WOMEN IN LEADERSHIP y (BOARD -2 ADIDAS AG) — 2 033 50% WOMEN IN LEADERSHIP (M2 AND ABOVE GLOBALLY) » esis =
Slide 36: Top Employer Globally and in Germany
TOP EMPLOYER GLOBALLY AND IN GERMANY Forbes Bpyeyke} sterm 9024 #12 OUT OF 700 GLOBALLY #1 OUT OF 650 #1 in Sports Industry COMPANIES IN GERMANY #10 OUT OF 400 GLOBALLY FOR WOMEN
Slide 37: Celebrating Messi's Move to Miami
CELEBRATING MESSI’S i MOVE TO MIAMI CELEBRATING AS A TEAM
Slide 38: Reality: Turning the Business Around
2023 REALITY WE ARE ALREADY TURNING THE BUSINESS AROUND
Slide 39: One Billion Better Than Expected
ONE BILLION BETTER THAN EXPECTED INITIAL GUIDANCE ACTUALS FEBRUARY 9 DECEMBER 31 +€1 BILLION -——————, 200 268 BETTER UNDERLYING 468 BUSINESS 0 LESS YEEZY 300 WRITE-OFF -700 € IN MILLIONS
Slide 40: Roadmap to 2026 Success
2026 ROADMAP TO SUCCESS 2023 2024 2025 2026 BETTER COMPANY HEALTHY COMPANY BREAK EVEN coop COMPANY COMPANY AND TRANSITION
Slide 41: Slide 41
Slide 42: Slide 42
Slide 43: Our People, the adidas Family
Slide 44: 2023 Better Than Expected
2023 BETTER THAN EXPECTED BUT STILL A LONG WAY TO GO 2023 CURRENCY-NEUTRAL SALES FLAT VS. 2022 Significantly above initial 2023 guidance of high-single- digit decline GROSS MARGIN UP 0.2PP T0 47.5% Driven by better business mix and lower freight costs; largely offset by FX effects and higher product
Slide 45: FY 2023 Revenue Growth by Market
FY 2023 REVENUE GROWTH BY MARKET NORTH AMERICA “16% LATIN AMERICA +22% VS. 2022 TOTAL COMPANY GROWTH AT 0% EMEA +/-0% VS, 2022 GREATER CHINA +8% VS, 2022 ASIA-PACIFIC +1% VS. 2022
Slide 46: FY 2023 Revenue Growth by Market - Excl. Yeezy
FY 2023 REVENUE GROWTH BY MARKET- EXCL. YEEZY ae GREATER NORTH +/-0% +1% CHINA Vs. 2022 EXCL. YEEZY 0, AMERICA +8% | +14% -16% -14% vs: 2022 EXCL. YEEZY VS. 2022 EXCL. YEEZY ASIA-PACIFIC LATIN 0 AMERICA +7% | +8% +22% | +22% VS, 2022 EXCL. YEEZY VS. 2022 EXCL. YEEZY TOTAL COMPANY GROWTH EXCL. YEEZY
Slide 47: FY 2023 Net Sales Growth by Channel
FY 2023 NET SALES GROWTH BY CHANNEL WHOLESALE (INCL. FRANCHISE) OWN RETAIL E-COM 41% -— Ic 21% OWN RETAIL 20% + FON 59% WHOLESALE FY 2023 CHANNEL GROWTH FY 2023 CHANNEL SPLIT
Slide 48: FY 2023 Net Sales Growth by Product Division
FY 2023 NET SALES GROWTH BY PRODUCT DIVISION 1% ACCESSORIES @ FOOTWEAR __ BT% 36% FOOTWEAR APPAREL —* APPAREL ACCESSORIES FY 2023 PRODUCT DIVISION GROWTH FY 2023 PRODUCT DIVISION SPLIT
Slide 49: FY 2023 Net Sales Growth by Category: Performance
FY 2023 NET SALES GROWTH BY CATEGORY PERFORMANCE te | , Emory <9 FOOTBALL RUNNING TRAINING OUTDOOR GOLF SPECIALIST SPORTS = US SPORTS A > > A A a N
Slide 50: FY 2023 Net Sales Growth by Category: Lifestyle
FY 2023 NET SALES GROWTH BY CATEGORY LIFESTYLE a3 q \ Ww ~ 2 y ORIGINALS, BASKETBALL, PARTNERSHIPS & SKATEBOARDING SPORTSWEAR > AA Ny Excl. Yeezy Basketball
Slide 51: Taking Responsibility for Environmental and Social Impact
TAKING RESPONSIBILITY FOR OUR ENVIRONMENTAL AND SOCIAL IMPACT ALMOST 80% ARTICLES SUSTAINABLE IN 2023 (APPAREL, ACCESSORIES & GEAR >90%; FOOTWEAR NEARLY DOUBLED) AVERAGE CO2E EMISSION PER PRODUCT: -2.9% (VS. 2022) TOP 10 IN CORPORATE HUMAN RIGHTS BENCHMARK 2023 (FOR APPAREL SECTOR) HUMAN RIGHTS & EN
Slide 52: Financial Update
Slide 53: FY 2023 Results Major P&L Items
FY 2023 RESULTS MAJOR P&L ITEMS FY 2022 FY € IN MILLIONS 0, POST 21,497 he EXCL. YEEZY: +2% EXCL. ARS DEVALUATION: +1% 47.3% 47.5% +0.2PP 669 NEGATIVE IMPACT FROM ARS DEVALUATION IN Q4: AROUND €100M LATEST GUIDANCE LOW-SINGLE-DIGIT DECLINE CURRENCY-NEUTRAL
Slide 54: FY 2023 Guidance Evolution
FY 2023 GUIDANCE EVOLUTION INITIAL GUIDANCE —- UPDATED GUIDANCE LATEST GUIDANCE ACTUALS FEBRUARY 9 JULY 24 OCTOBER 17 HIGH-SINGLE-DIGIT MID-SINGLE-DIGIT LOW-SINGLE-DIGIT DECLINE DECLINE DECLINE BREAK-EVEN BREAK-EVEN € 100 MILLION he € 200 MILLION - € 700 MILLION - € 450 MILLION - € 100 MILLION € 268
Slide 55: Q4 2023 Results Major P&L Items
Q4 2023 RESULTS MAJOR P&L ITEMS € IN MILLIONS GROSS MARGIN OPERATING PROFIT FY 2022 22,511 47.3% 669 FY 2023 21,427 47.5% 268 Y-0-Y 0% C.N. 5% +0.2PP 60% 94 0. -2% 5,205 C.N. 39.1% 44.6% +5.5PP eq EXCL. YEEZY: -1% EXCL. ARS DEVALUATION: +3% -724 377 +48% NEGATIVE IMPACT FROM ARS DEVALUATION IN Q4: A
Slide 56: FY 2023 Financial Results
FY 2023 FINANCIAL RESULTS € IN MILLIONS FY 2022 FY 2023 Y-0-Y GROSS PROFIT 10,644 10,184 % OF NET SALES 47.3% 47.5% +0.2PP
Slide 57: FY 2023 Results Gross Margin Development
FY 2023 RESULTS GROSS MARGIN DEVELOPMENT |__BUSINESSMIX JE a FREIGHT [a] a ae | + | [+] a SOUNTG [a] IMPROVING THROUGHOUT THE YEAR YEEZY EFFECT 415% 413% +0.2PP 46.7% GROSS MARGIN GROSS MARGIN GROSS MARGIN FY 2022 FY 2023 FY 2023 EXCL. YEEZY
Slide 58: Q4 2023 Results Gross Margin Development
Q4 2023 RESULTS GROSS MARGIN DEVELOPMENT LOW DOUBLE-DIGIT-MILLION yaa | AMOUNT OF YEEZY- | BUSINESSMIX ES RELATED WRITE OFFS [a] 449% a Moh [a] 391% «55PP a ae (© ee [a] [a] ~~ GROSS MARGIN GROSS MARGIN GROSS MARGIN 04 2022 04 2025 042025 EXCL. YEEZY
Slide 59: FY 2023 Financial Results
FY 2023 FINANCIAL RESULTS € IN MILLIONS FY 2022 22,514 10,644 471.3% 10,184 47.5% 2,763 12.3% 7,498 33.3% 2,528 11.8% 7,541 35.2% 669 3.0% INCL. MORE THAN €340M OF ONE-OFF COSTS RELATED T0: = STRATEGIC REVIEW CONDUCTED (~€200M) = DONATIONS AND ACCRUALS FOR FURTHER DONATIONS (MORE THAN €140M)
Slide 60: FY 2023 Financial Results
FY 2023 FINANCIAL RESULTS € IN MILLIONS FY 2022 | rv2023 | Y-0-Y 3.0% 1.3% -1.7PP 1.7% -1,4PP 134 -7% 34.5% +154.7PP 254 eo SIGNIFICANT IMPACT OF NON- DEDUCTIBLE EXPENSES AND WITHHOLDING TAXES
Slide 61: Balance Sheet KPIs
BALANCE SHEET KPIs emu ew FESS Lo INVENTORIES 5,973 | asa | Tana
Slide 62: Inventory Development
INVENTORY DEVELOPMENT € IN BILLIONS Te ae v 6.0 Ui Yee 7 5.5 a 4.8 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 YN
Slide 63: Balance Sheet KPIs
BALANCE SHEET KPIs € IN MILLIONS INVENTORIES ACCOUNTS RECEIVABLE ACCOUNTS PAYABLE OPERATING WORKING CAPITAL 31 DEC 2022 5,973 2,529 2,908 5,594 -24% | -22% C.N. -25% | -23% C.N. -22% | -21% C.N. -26% | -23% C.N.
Slide 64: Average Operating Working Capital Development
AVERAGE OPERATING WORKING CAPITAL DEVELOPMENT Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023
Slide 65: Balance Sheet KPIs
BALANCE SHEET KPIs € IN MILLIONS 31 DEC 2022 5,973 2,529 2,908 5,594 798 -24% |-22% C.N. -25% |-23% C.N. -22% | -21% C.N. -26% |-23% C.N. +79%
Slide 66: FY 2023 Capex Split Focused Investments
FY 2023 CAPEX SPLIT FOCUSED INVESTMENTS OTHER LOGISTICS CONTROLLED SPACE INITIATIVES
Slide 67: Leverage Ratio
LEVERAGE RATIO ADJUSTED NET BORROWINGS ADJUSTED NET BORROWINGS/EBITDA € IN BILLIONS RATIO (X) 6.0 3.2X at 2.4 1.2X 2.1 0.7X 0.7X FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023
Slide 68: Dividend Proposal for 2023
DIVIDEND PROPOSAL FOR 2023 FY 2022 FY 2023 PROPOSAL REFLECTS = Better-than-expected performance in transition year 2023 DIVIDEND PER SHARE €0.70 € 0.70 = Robust financial profile = Confident outlook for 2024 SHARES OUTSTANDING 179 MILLION 179 MILLION GOING FORWARD = Return to dividend policy of annu
Slide 69: Market Set-up 2023
MARKET SET-UP 2023 NORTH EMEA AMERICA GREATER CHINA APAC LATIN AMERICA
Slide 70: New Market Set-up 2024 and Beyond
NEW MARKET SET-UP 2024 AND BEYOND NORTH AMERICA LATIN AMERICA EUROPE SOUTH KOREA GREATER CHINA JAPAN EMERGING MARKETS
Slide 71: Outlook 2024
Slide 72: Roadmap to 2026 Success
2026 ROADMAP TO SUCCESS 2023 2024 2025 2026 BETTER COMPANY HEALTHY COMPANY BREAK EVEN coop COMPANY COMPANY AND TRANSITION
Slide 73: Our Focus Remains the Same for 2024
OUR FOCUS REMAINS THE SAME FOR 2024 OUR FOCUS AREAS FOR 2024 PEOPLE PRODUCT CONSUMER RETAILERS ATHLETES
Slide 74: Power of Three
Slide 75: We Simplified Our Labels
WE SIMPLIFIED OUR LABELS wr rw~4s
Slide 76: We Sharpened Our Consumer Facing Messaging
WE SHARPENED OUR CONSUMER FACING MESSAGING IMPOSSIBLE IS NOTHING YOU GOT THIS
Slide 77: Originals Campaign 2023 / You Got This Campaign 2024
ORIGINALS CAMPAIGN 2023 YOU GOT THIS CAMPAIGN 2024 § ‘ \ ¥ YOU GORMTHIS YOU GOT 4 YOU GOT THIS \) : T- | > -
Slide 78: Land with Impact
LAND WITH IMPACT YOUTHFUL & OPTIMISTIC THE CLOSE UP: NEW MOTIVATIONAL MESSAGE CONNECTING OUR BRAND i z >
Slide 79: Land with Impact in Moments That Matter
LAND WITH IMPACT IN MOMENTS THAT MATTER NBA ALL-STARS WEEKEND 2024 SUPER BOWL 2024
Slide 80: Centraal
Centraal
Slide 81: Continuing to Be Relevant to Our Consumer, Locally
Slide 82: Great Products in 2024
Slide 83: We Will Continue Having the Hottest Shoes on the Street
Slide 84: Sell-Out Success with Latest Product Launches
Slide 85: 2024 Will Be a Great Sports Year
Slide 86: ▪ ▪ ▪
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Slide 87: Gross Margin Development Significantly Better in H2
Slide 88: Operating Expenses
Slide 89: ▪ ▪ ▪ ▪
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Slide 90: Roadmap to 2026 Success
Slide 91: Q&A