Adidas Ag · XETR:ADS
Adidas — Adidas Ag Ord — Q1 2024 Earnings Presentation
50 slides from Adidas's earnings presentation, Apr 30, 2024
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Slide 3: Stronger than expected start to 2024
STRONGER THAN EXPECTED START TO 2024 Q1 2024 CURRENCY-NEUTRAL NET SALES UP 8% Y-0-Y Underlying business (excl. Yeezy) up 5% Y-O-Y currency-neutral GROSS MARGIN UP 6.4PP TO 51.2% Driven by lower sales discounts, reduced landed costs, favorable category/channel mix and less inventory provisions; partl
Slide 4: Very strong performance in footwear lifestyle franchises
GAZELLE HANDBALL SPEZIAL} VERY STRONG PERFORMANCE IN FOOTWEAR LIFESTYLE FRANCHISES
Slide 5: Strong product launches in Q1 2024
PREDATOR 24 EURO 2024 JERSEYS mK SUPERNOVA RISE ww. AE 1 HARDEN VOL. 8 CLOT SUPERSTAR STRONGER UNDERLYING BUSINESS DRIVEN BY STRONG PRODUCT LAUNCHES IN Q1 2024
Slide 6: Q1 2024 revenue growth by market
Q1 2024 REVENUE GROWTH BY MARKET / EUROPE y < JAPA $14% : SOUTH KOREA IS GREATER = CHINA . +8% A NORTH AMERICA : “4% a ~ LATING ~ ho AMERICA ) . WARKETS" ~ +$18% | 417% TOTAL COMPANY GROWTH Q1 AT +8% CURRENCY.:NEUTRAL NET SALES DEVELO
Slide 7: Continue investing in marketing globally
CONTINUE INVESTING IN MARKETING GLOBALLY BRAND CAMPAIGN ROLLED OUT ACROSS MARKETS
Slide 8: Continue investing in being locally relevant
CONTINUE INVESTING IN BEING LOCALLY RELEVANT LOCALIZING PRODUCTS AND COLLABORATING WITH LOCAL BRANDS COLLABORATING WITH LOCALIZATION OF GLOBAL ADICOLOR ACTIVATION LOCAL BRANDS BEST-SELLERS FOR KOREA IN CHINA
Slide 9: Continue investing in being locally relevant
CONTINUE INVESTING IN BEING LOCALLY RELEVANT COLLABORATING WITH LOCAL PARTNERS STAN SMITH AND TRAE PHARRELL AND EDISON BIZARRAP AT XOCHITL GOMEZ YOUNG IN MEXICO CELEBRATING CLOT LATIN GRAMMYS AT COACHELLA
Slide 10: Continue investing in strong infrastructure globally
CONTINUE INVESTING IN STRONG INFRASTRUCTURE GLOBALLY NEW DISTRIBUTION CENTER NEW DISTRIBUTION NETWORK IN UTILIZING OUR FACTORY IN IN SAUDI ARABIA EUROPE: CAMPUS SOUTH SCHEINFELD, GERMANY
Slide 11: Slide 11
Slide 12: Q1 2024 net sales growth by channel
Q1 2024 NET SALES GROWTH BY CHANNEL 38% «-—— DTC 21% eb) OWN RETAIL 17% ;___ OWN E-COM 62% WHOLESALE Q1 2024 CHANNEL GROWTH Q1 2024 CHANNEL SPLIT
Slide 13: Continue investing in own stores
CONTINUE INVESTING IN OWN STORES BR ASD DAG SHIP SFOR I S tL \ UKRALNg MU YEAR i Se Rist | : OPENING NEW STORES ELEVATING EXISTING STORES
Slide 14: Continue investing with retail partners
CONTINUE INVESTING WITH RETAIL PARTNERS SNIPES 5 | oe b #, GO, © JD X ADIDAS, PARIS ELEVATING OUR WHOLESALE PARTNERSHIPS
Slide 15: Q1 2024 net sales growth by product division
Q1 2024 NET SALES GROWTH BY PRODUCT DIVISION 6% ACCESSORIES @ 59% 35% FOOTWEAR APPAREL —s ACCESSORIES Q1 2024 PRODUCT DIVISION GROWTH Q1 2024 PRODUCT DIVISION SPLIT
Slide 16: Q1 2024 net sales growth by category
Q1 2024 NET SALES GROWTH BY CATEGORY PERFORMANCE LIFESTYLE . Se aa “‘~% \ x
Slide 17: Continue investing in our partners
XOCHITL GOMEZ A \ all WATARAE G.)s @ «a « — fi — LARS ms a. h NOOTBAAR Ni 4 PS : 7 en € atanssn,f soress @ ‘ 427 \ aA } RN an | nl “ = SAL NASSR FOOTBALL CLUB CONTINUE INVESTING IN OUR PARTNERS WELCOME TO THE ADIDAS FAMILY!
Slide 18: Continue investing and winning in relevant sporting events
CONTINUE INVESTING AND WINNING IN RELEVANT SPORTING EVENTS WORLD RECORD /PERES JEPCHIRCHIR 02: bf: 16 LONDON MARATHON BOSTON MARATHON WORLD RECORD AND 5 ouror6 PODIUMS SISAY LEMMA STORMS TO VICTORY IN ADIZERO ADIOS PRO EVO 1
Slide 19: Most innovative shoe
MOST INNOVATIVE SHOE ADIZERO ADIOS PRO EVO 1 IS WINNING PODIUMS
Slide 20: Adizero Road to Records 2024
ADIZERO ROAD TO RECORDS 2024 , +1100 RUNNERS JOINED PUBLIC 160 ADIDAS RUNNERS CAPTAINS & 160 ADIDAS FRIENDS & PARTNERS 1 WORLD RECORD IN MEN'S MILE RACE AND EVEN MORE COACHES ON CAMPUS FOR ADIDAS ON CAMPUS EMMANUEL WANYONYI (3:54.50) CHEERED FROM THE SIDE LINE RUNNERS WEEK 40 ACCOUNTS 40 NATIONALITI
Slide 21: We continue to have the hottest shoes on the street
WE CONTINUE TO HAVE THE HOTTEST SHOES ON THE STREET SAMBA: 4 GAZELLE | HANDBALL ~ SPEZIAL @& > SCALING UP A
Slide 22: Continue investing in our best-sellers
CONTINUE INVESTING IN OUR BEST-SELLERS TERRACE CAMPAIGN LAUNCHES GLOBALLY
Slide 23: We have the hottest lifestyle shoes in Europe
WE HAVE THE 3 HOTTEST LIFESTYLE SHOES IN EUROPE EUROPE, MARCH 2024 SEARCH DEVELOPMENT SEARCH DEVELOPMENT BY MONTH MARCH ‘24 VS, FEBRUARY ‘24 5,000K CAMPUS Campus, 4,500K Samba 4,000K Gazelle 3,500K Competitor A 3,000K SAMBA Spezial 68% 2,500K GAZELLE Competitor B COMPETITOR A 2,000K /SPEZIAL Competi
Slide 24: We continue to have the hottest shoes on the street
WE CONTINUE TO HAVE THE HOTTEST SHOES ON THE STREET SCALING UP FUTURE
Slide 25: SL incubation in full swing globally
SL 72 INCUBATION IN FULL SWING GLOBALLY EXTENDING OUR TERRACE STORY INTO RUNNING
Slide 26: LO Profile incubation starting
LO PROFILE INCUBATION STARTING NEW PRODUCT SILO TO EXCITE HER i mia Bi sal " Se
Slide 27: We continue to have the hottest shoes on the street
WE CONTINUE TO HAVE THE HOTTEST SHOES ON THE STREET SCALING UP LIFESTYLE RUNNING FUTURE
Slide 28: Financial update
i FINANCIAL U
Slide 29: Q1 2024 financial results
Q1 2024 FINANCIAL RESULTS € IN MILLIONS NET SALES GROSS PROFIT % OF NET SALES -~ EE INCL. YEEZY REVENUES OF ~€150M UNDERLYING BUSINESS (EXCL. YEEZY) +5% C.N. 2,363 2,796 44.8% 51.2% +6.4PP
Slide 30: Gross margin development in Q1
GROSS MARGIN DEVELOPMENT IN Q1 0.7PP 51.2% smn — BOLE% +6.4PP 44.8% GROSS MARGIN GROSS MARGIN GROSS MARGIN Q1 2023 Q1 2024 Q1 2024 EXCL. YEEZY
Slide 31: Strong gross margin improvement in 2024
STRONG GROSS MARGIN IMPROVEMENT IN 2024 Q1 FY 2024 2024 FX o— -2pP Wy FREIGHT PRODUCT MIX MARKET MIX DISCOUNTING PRODUCT COSTS INVENTORY PROVISION > TOTAL
Slide 32: Q1 2024 financial results
Q1 2024 FINANCIAL RESULTS tno ane EE +4% INCL. YEEZY REVENUES OF ~€150M NET SALES 5,274 | sass | Ez a- UNDERLYING BUSINESS (EXCL. YEEZY) +5% C.N. GROSS PROFIT 2,363 2,796 +18% % OF NET SALES 44.8% 51.2% +6.4PP MARKETING & POS EXPENSES 601 % OF NET SALES 11.4% 12.0% +0,6PP OOH EXPENSES 1,766 1,822 %
Slide 33: Q1 2024 financial results
Q1 2024 FINANCIAL RESULTS INCL. YEEZY CONTRIBUTION OF ~€50M en muuons TEM | 012024 | OPERATING PROFIT 60 | 8 % OF NET SALES 1.1% FINANCIAL INCOME 13 | | FINANCIAL EXPENSES 44 | 5 | INCOME BEFORE TAXES 32 oa % OF NET SALES 0.6% INCOME TAXES 55 14 +33% % OF NET SALES 174.9% (144.8PP) NET INCOME/ (LOSS
Slide 34: Balance sheet KPIs
BALANCE SHEET KPIs eM MIUONS 31 MAR 2023 31 MAR 2024 | pewarion |
Slide 35: Inventory development
INVENTORY DEVELOPMENT pe MORE THAN € 1.2 BILLION IMPROVEMENT (-22%|-20% C.N.) & v Wh 5.5 € IN BILLIONS ‘ 44 Q1 2023 Q2 2023 Q3 2023 04 2023 Qi 2024 SNEED,
Slide 36: Balance sheet KPIs
BALANCE SHEET KPIs EINMILUONS 31 MAR 2023 31 MAR 2024 INVENTORIES 5,675 -22% |-20% C.N. ACCOUNTS RECEIVABLE 2,818 -8% | -5% C.N. ACCOUNTS PAYABLE 2,102 +9% | +10% C.N. OPERATING WORKING CAPITAL 6,391 -26% |-23% C.N.
Slide 37: Average operating working capital development
AVERAGE OPERATING WORKING CAPITAL DEVELOPMENT 25.7% Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024
Slide 38: Balance sheet KPIs
BALANCE SHEET KPIs € IN MILLIONS INVENTORIES ACCOUNTS RECEIVABLE ACCOUNTS PAYABLE OPERATING WORKING CAPITAL CASH AND CASH EQUIVALENTS 31 MAR 2023 5,675 2,818 2,102 6,391 778 31 MAR 2024 -22% |-20% C.N. -8% | -5% C.N. +9% | +10% C.N. -26% |-23% C.N. +40%
Slide 39: Balance sheet items
BALANCE SHEET ITEMS CASH AND CASH EQUIVALENTS ADJUSTED NET BORROWINGS € IN MILLIONS € IN MILLIONS _... EEE---- fee -€1./BN ie #----------- ' 6,630 178 | Q1 2023 Q1 2024 Q1 2023 Q1 2024 PROGRESS TOWARD RETURNING TO TARGETED ADJUSTED NET BORROWINGS/EBITDA RATIO OF BELOW <2.0X
Slide 40: Outlook 2024
a a ~ OUTLOOK 2024
Slide 41: FY 2024 guidance overview
FY 2024 GUIDANCE OVERVIEW FY 2024 GUIDANCE ———_ APRIL16. 2 ———— MID- TO HIGH-SINGLE- NET SALES GROWTH CURRENCY-NEUTRAL DIGIT INCREASE OPERATING PROFIT ~ €700M REPORTED ASSUMPTIONS SELLING REMAINING VEEZY INVENTORY ON AVERAGE AT COST = €200m additional top-line contribution = No further operating pro
Slide 42: FY 2024 guidance Yeezy
FY 2024 GUIDANCE YEEZY } 12024 | 02-04 2024 UPDATED FY 2024 GUIDANCE [| APRILI6 = | wt sales Ea en sie ~€50M OPERATING PROFIT ED a re “ Selling remaining inventory on average at cost
Slide 43: Stronger underlying business than expected: net sales growth
STRONGER UNDERLYING BUSINESS THAN EXPECTED FY 2024 GUIDANCE: NET SALES GROWTH +~€ 400 MILLION rT MID- TO HIGH-SINGLE _.._..DIGITINCREASE + ~€300M MID-SINGLE —————— DIGITINCREASE *~€100M INITIAL YEEZY UNDERLYING UPDATED _ GUIDANCE — BUSINESS GUIDANCE MARCH 13 APRIL 16
Slide 44: Stronger underlying business than expected: operating profit
STRONGER UNDERLYING BUSINESS THAN EXPECTED FY 2024 GUIDANCE: OPERATING PROFIT +~ € 200 MILLION I] +~€150M ~€500M “+ ~€50M. BO INITIAL YEEZY UNDERLYING UPDATED GUIDANCE BUSINESS GUIDANCE MARCH 13 APRIL 16
Slide 45: Top-line acceleration of underlying business in 2024
TOP-LINE ACCELERATION OF UNDERLYING BUSINESS IN 2024 H1 wee eee eee eee eee = Negatively impacted by initiatives to reduce inventories in North America = Better-than-expected growth in Q1 = Topline acceleration projected for Q2 H2 QL: +5% = Growth benefitting from improved go-to- market process and
Slide 46: Ropset & Z.N.E Sportswear
ROPSET 3 & Z.N.E SPORTSWEAR .. > Fe C S| | ; GREAT PRODUCTS LAUNCHING IN 2024
Slide 47: Road to Paris: official adidas team kits launch
ROAD TO PARIS: OFFICIAL ADIDAS TEAM KITS LAUNCH
Slide 48: A great year of sports 2024
2024 A GREAT YEAR OF SPORTS (er OLYMPIC...
Slide 49: Roadmap to 10% NS growth
2026 ROADMAP TO 10% NS GROWTH SUCCESS ~ 50-52%GROSS MARGIN > 30% OOH 2023 2024 2025 2026 ° 412% MWB BETTER HEALTHY COMPANY COMPANY BREAK EVEN GOOD COMPANY AND TRANSITION COMPANY rz, 10% EBIT
Slide 50: Q&A