Adidas Ag · XETR:ADS
Adidas — Adidas Ag Ord — Q3 2024 Earnings Presentation
70 slides from Adidas's earnings presentation, Oct 29, 2024
Slide 1: Q3 Results
Q3 RESULTS October 29, 2024
Slide 2: Congratulations, Aitana Bonmatí, Ballon d'Or 2024
ADIDAS AG CONGRATULATIONS, AITANA BONMATÍ BALLON D’OR 2024 2
Slide 3: What a (Running) Weekend!
ADIDAS AG PATRICK LANGE THIRD IRONMAN AGNES NGETICH WORLD CHAMPIONSHIP YOMIF KEJELCHA RUNS SECOND TITLE AND HALF MARATHON FASTEST HALF COURSE RECORD WORLD RECORD MARATHON EVER 07:35:53 57:30 63:04 WHAT A (RUNNING) WEEKEND! 3
Slide 4: The Summer of Sports
e GERMAN 2024 THE SUMMER OF SPORTS
Slide 5: The Summer of Sports
THE SUMMER OF SPORTS 5
Slide 6: The Summer of Sports
THE SUMMER OF SPORTS 6
Slide 7: Summer of Sports Fuels Strong Third Quarter Growth
SUMMER OF SPORTS FUELS STRONG THIRD QUARTER GROWTH 7
Slide 8: Summer of Sports Fuels Strong Third Quarter Growth
SUMMER OF SPORTS FUELS STRONG THIRD QUARTER GROWTH € IN MILLIONS Q3 2024 Y-O-Y NET SALES 6,438 +10.3% EXCL. YEEZY C.N. +14% C.N. ADIDAS AG GROSS PROFIT 3,301 +11.7% % OF NET SALES 51.3% +2.0PP OPERATING 2,114 +10% OVERHEAD EXPENSES 32.8% +0.7PP % OF SALES OPERATING PROFIT 598 +46% % OF NET SALES 9.3
Slide 9: Better Company: Break Even and Transition
ADIDAS AG 2023 2024 BETTER COMPANY BREAK EVEN COMPANY AND TRANSITION 9
Slide 10: The Time to Be a Better Company
THE TIME TO BE A BETTER COMPANY 2024 WE DELIVERED WHAT WE PROMISED ADIDAS AG …AND MORE BETTER COMPANY 10
Slide 11: Q3 2024 Revenue Growth by Market
Q3 2024 REVENUE GROWTH BY MARKET GREATER UNDERLYING CHINA I BUSINESS NORTH UNDERLYING EUROPE I BUSINESS +9% VS. 2023 I +8% +18% UNDERLYING AMERICA I BUSINESS I +21% -7% VS. 2023 I +1% VS. 2023 JAPAN/ UNDERLYING SOUTH KOREA I BUSINESS ADIDAS AG +18% VS. 2023 I +17% LATIN UNDERLYING EMERGING UNDERLYIN
Slide 12: YTD September 2024 Revenue Growth by Market
YTD SEPTEMBER 2024 REVENUE GROWTH BY MARKET GREATER UNDERLYING CHINA I BUSINESS NORTH UNDERLYING EUROPE I BUSINESS +9% VS. 2023 I +8% +17% UNDERLYING AMERICA I BUSINESS I +19% -6% VS. 2023 I -3% VS. 2023 JAPAN/ UNDERLYING SOUTH KOREA I BUSINESS ADIDAS AG +10% VS. 2023 I +11% LATIN UNDERLYING EMERGIN
Slide 13: Q3 2024 Revenue Growth by Channel
Q3 2024 REVENUE GROWTH BY CHANNEL 36% DTC 20% OWN RETAIL 16% OWN E-COM 64% WHOLESALE FRANCHISE +13% +15% -3% +25% WHOLESALE OWN RETAIL E-COM EXCL. (INCL. FRANCHISE) YEEZY REVENUE GROWTH CURRENCY NEUTRAL
Slide 14: Women's Stores (Re-)Opening in Emerging Markets
WOMEN’S STORES (RE-)OPENING IN EMERGING MARKETS ADIDAS AG FIRST WOMEN'S STORE IN SAUDI ARABIA REOPENING OF WOMEN’S STORE IN MALL OF THE EMIRATES IN DUBAI 14
Slide 15: Elevating Our Retail Experience Across the Globe
ELEVATING OUR RETAIL EXPERIENCE ACROSS THE GLOBE BUKCHON: FIRST SNEAKER ADIDAS AG STORE IN SOUTH KOREA BRAND STORE LA CHENGDU BRAND CENTER BRAND FLAGSHIP POP-UP ORIGINALS STORE STORE SEOUL DOWNTOWN LA IN SÃO PAULO N42 POP-UP PARIS 15
Slide 16: Elevating Our Retail Experience Across the Globe
ELEVATING OUR RETAIL EXPERIENCE ACROSS THE GLOBE FOOTWEAR WALL IN MUSINSA SEONGSU IRAQ BANGLADESH UZBEKISTAN ADIDAS AG KYRGYZSTAN AZERBAIJAN VIETNAM NIGERIA FIRST FOOT LOCKER IN SAUDI ARABIA FUTURE CITY EXPANSION IN CHINA: FRANCHISE EXPANSION IN EXPANDING GLOBALLY WITH OUR ~300 STORES OPENED IN 2024
Slide 17: Q3 2024 Revenue Growth by Product Division
Q3 2024 REVENUE GROWTH BY PRODUCT DIVISION 7% ACCESSORIES 59% ADIDAS AG FOOTWEAR 34% APPAREL +14% +5% +10% FOOTWEAR APPAREL ACCESSORIES REVENUE GROWTH CURRENCY NEUTRAL 17
Slide 18: Q3 2024 Revenue Growth by Category
Q3 2024 REVENUE GROWTH BY CATEGORY ADIDAS AG PERFORMANCE SPORTSWEAR ORIGINALS, BASKETBALL, PARTNERSHIPS & SKATEBOARDING +10% +4% +20% REVENUE GROWTH CURRENCY NEUTRAL 18
Slide 19: We Have a Very Strong Lifestyle Portfolio
WE HAVE A VERY STRONG LIFESTYLE PORTFOLIO 19
Slide 20: Scaled Up / Scaling Up
SCALED UP ADIDAS AG SCALING UP 20
Slide 21: As Seen on the Streets
AS SEEN ON THE STREETS ~10 TIMES MORE PAIRS PLANNED FOR SS25 VS SS24 ADIDAS AG SS24 FW24 SS25 21
Slide 22: Scaled Up / Scaling Up
SCALED UP ADIDAS AG SCALING UP 22
Slide 23: From Fashion Trend to Sell-Through Success
FROM FASHION TREND TO SELL-THROUGH SUCCESS ADIDAS AG 23
Slide 24: Stella McCartney Fashion Show in Paris
STELLA MCCARTNEY FASHION SHOW IN PARIS ADIDAS AG 24
Slide 25: Scaled Up / Scaling Up / Future
SCALED UP ADIDAS AG SCALING UP FUTURE 25
Slide 26: SL72, ZX, Adizero Aruku
CLASSIC MODERN SPORTSWEAR SPORT SL72 ZX ADIZERO ARUKU MEGARIDE LIGHTBLAZE CLIMACOOL ADIZERO 26
Slide 27: Lifestyle Running Launches
LIFESTYLE RUNNING LAUNCHES INNOVATION INCUBATION ADIDAS AG CLIMACOOL ADIZERO ARUKU 27
Slide 28: Scaled Up, Scaling Up, Future
SCALED UP SCALING UP FUTURE 28
Slide 29: Incubating an Icon
INCUBATING AN ICON 29
Slide 30: VL Court, Barreda, Grand Court
PRICE POINTS FROM € 100-150 PRICE POINTS FROM € 60-80 VL COURT BARREDA GRAND COURT RUN 70 30
Slide 31: We Have the Hottest Apparel on the Streets
WE HAVE THE HOTTEST APPAREL ON THE STREETS
Slide 32: We Are a Sports Brand
R\Y Q = <3 Lid oa =A Lu =o ao. wn R\N
Slide 33: Our Performance Offering Is Just as Strong
OUR PERFORMANCE OFFERING IS JUST AS STRONG 33
Slide 34: We Are Reinvesting in Sports
I le ces = WE ARE REINVESTING IN SPORTS
Slide 35: Basketball Signature Shoes
BASKETBALL SIGNATURE SHOES ANTHONY EDWARDS 1 D.O.N. 6 HARDEN VOL. 8 DAME 9
Slide 36: Adizero Running Launches
ADIZERO RUNNING LAUNCHES ADIZERO EVO SL ADIZERO ADIOS PRO 4
Slide 37: Adizero Running Launches
ADIZERO RUNNING LAUNCHES ADIZERO PRO EVO 1 LAUNCH IN CHINA
Slide 38: Successful Football Launches
SUCCESSFUL FOOTBALL LAUNCHES FOOTBALL BOOTS KIT LAUNCHES THIRD JERSEYS
Slide 39: Magic Happens When We Unite Our Power
MAGIC HAPPENS WHEN WE UNITE OUR POWER 39
Slide 40: Sport Meets Style
MAGIC HAPPENS WHEN WE UNITE OUR POWER SPORT MEETS STYLE ADIDAS AG 40
Slide 41: Sport Meets Style
MAGIC HAPPENS WHEN WE UNITE OUR POWER SPORT MEETS STYLE ADIDAS AG 41
Slide 42: The Time to Be a Better Company
2024 THE TIME TO BE A BETTER COMPANY BETTER COMPANY 42
Slide 43: Financial Update
FINANCIAL UPDATE
Slide 44: Financial Results
FINANCIAL RESULTS € IN MILLIONS Q3 2023 Q3 2024 Y-O-Y NET SALES 5,999 6,438 +7% INCL. YEEZY REVENUES OF ~€ 200M +10% C.N. UNDERLYING BUSINESS (EXCL. YEEZY) +14% C.N. GROSS PROFIT 2,955 3,301 +12% % OF NET SALES 49.3% 51.3% +2.0PP ADIDAS AG 44
Slide 45: Gross Margin Development
GROSS MARGIN DEVELOPMENT PRODUCT COSTS +2.0PP FREIGHT 51.3% PRODUCT MIX DISCOUNTING 49.3% INVENTORY PROVISION ADIDAS AG FX YEEZY GROSS GROSS MARGIN MARGIN Q3 2023 Q3 2024 ILLUSTRATIVE. 45
Slide 46: Financial Results
FINANCIAL RESULTS € IN MILLIONS Q3 2023 Q3 2024 Y-O-Y NET SALES 5,999 6,438 +7% +10% C.N. GROSS PROFIT 2,955 3,301 +12% % OF NET SALES 49.3% 51.3% +2.0PP ADIDAS AG OTHER OPERATING INCOME 5 113 +2,363% INCL. ~€ 100M ACCRUALS RELEASE MARKETING & POS EXPENSES 644 724 +12% % OF NET SALES 10.7% 11.2% +0.
Slide 47: Operating Profit Decomposed
OPERATING PROFIT DECOMPOSED € IN MILLIONS INCLUDED IN INCLUDED IN OTHER OPERATING INCOME OOH EXPENSES 598 ~50 ~548 ~100 ~100 ADIDAS AG REPORTED ACCRUALS DONATIONS YEEZY UNDERLYING RELEASE PROFIT OPERATING OPERATING PROFIT PROFIT Q3 2024 Q3 2024 ILLUSTRATIVE. 47
Slide 48: Financial Results
FINANCIAL RESULTS € IN MILLIONS Q3 2023 Q3 2024 Y-O-Y OPERATING PROFIT 409 598 +46% % OF NET SALES 6.8% 9.3% +2.5PP FINANCIAL INCOME 31 29 -7% ADIDAS AG FINANCIAL EXPENSES 115 25 -78% INCOME BEFORE TAXES 326 601 +85% % OF NET SALES 5.4% 9.3% +3.9PP INCOME TAXES 55 133 +140% % OF NET SALES 17.0% 22.1
Slide 49: Balance Sheet KPIs
BALANCE SHEET KPIs 30 SEPT 2023 30 SEPT 2024 CHANGE € IN MILLIONS INVENTORIES 4,849 4,524 -7% | -3% C.N. ADIDAS AG 49
Slide 50: Inventory Development
INVENTORY DEVELOPMENT € IN BILLIONS -7% | -3% C.N. 4.8 HEALTHY INVENTORIES TO ADIDAS AG ~€ 300M 4.5 4.5 4.5 SUPPORT CONTINUED DOUBLE- 4.4 ~€ 50M DIGIT TOP-LINE GROWTH ~€ 250M ~€ 150M ~€ 200M YEEZY Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 AT QUARTER-END. 50
Slide 51: Balance Sheet KPIs
BALANCE SHEET KPIs 30 SEPT 2023 30 SEPT 2024 CHANGE € IN MILLIONS INVENTORIES 4,849 4,524 -7% | -3% C.N. ACCOUNTS RECEIVABLE ADIDAS AG 2,721 2,951 +8% | +13% C.N. ACCOUNTS PAYABLE 2,013 2,589 +29% | +31% C.N. OPERATING WORKING CAPITAL 5,557 4,886 -12% | -8% C.N. 51
Slide 52: Average Operating Working Capital Development
AVERAGE OPERATING WORKING CAPITAL DEVELOPMENT AS A % OF NET SALES -6.3PP 26.9% 25.7% ADIDAS AG 23.5% 21.7% 20.6% Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 AVERAGE OPERATING WORKING CAPITAL = AVERAGE OF OPERATING WORKING CAPITAL FOR THE LAST 4 QUARTERS DIVIDED BY NET SALES FOR THE LAST 4 QUARTERS. 52
Slide 53: Balance Sheet KPIs
BALANCE SHEET KPIs 30 SEPT 2023 30 SEPT 2024 CHANGE € IN MILLIONS INVENTORIES 4,849 4,524 -7% | -3% C.N. ACCOUNTS RECEIVABLE ADIDAS AG 2,721 2,951 +8% | +13% C.N. ACCOUNTS PAYABLE 2,013 2,589 +29% | +31% C.N. OPERATING WORKING CAPITAL 5,557 4,886 -12% | -8% C.N. CASH AND CASH EQUIVALENTS 954 1,781 +
Slide 54: Cash and Net Borrowings Development
CASH AND NET BORROWINGS DEVELOPMENT CASH AND CASH EQUIVALENTS ADJUSTED NET BORROWINGS € IN MILLIONS € IN MILLIONS -€ 1.0BN +87% ADIDAS AG 5,235 1,781 4,211 954 Q3 2023 Q3 2024 Q3 2023 Q3 2024 AT QUARTER-END. 54
Slide 55: Net Leverage Ratio Development
NET LEVERAGE RATIO DEVELOPMENT 4.8 STRONG PROGRESS TOWARD RETURNING TO TARGETED ADJUSTED NET BORROWINGS/EBITDA RATIO OF BELOW <2.0X 3.3 3.2 2.7 ADIDAS AG <2.0x Financial 2.1 Policy Target Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 ILLUSTRATIVE. 55
Slide 56: Outlook 2024
OUTLOOK 2024
Slide 57: FY 2024 Guidance Overview
FY 2024 GUIDANCE OVERVIEW ASSUMPTIONS INITIAL UPDATED UPDATED FY 2024 GUIDANCE GUIDANCE GUIDANCE GUIDANCE SELLING REMAINING YEEZY INVENTORY ON AVERAGE AT COST MARCH 13 APRIL 16 JULY 16 OCTOBER 15 ▪ €50 million additional top NET SALES MID-SINGLE- MID- TO HIGH- HIGH-SINGLE- line contribution GROWTH D
Slide 58: FY 2024 Guidance Yeezy
FY 2024 GUIDANCE YEEZY Q1 2024 Q2 2024 Q3 2024 Q4 2024 LATEST FY 2024 GUIDANCE OCTOBER 15 NET ~ €600M SALES ~ €150M ~ €200M ~ €200M ~ €50M (PREVIOUSLY: ~ €500M) ADIDAS AG OPERATING ~ €150M PROFIT ~ €50M ~ €50M ~ €50M ~ €0M (PREVIOUSLY: ~ €100M) YEEZY INVENTORY1 ~ €200M ~ €150M ~ €50M Selling remaini
Slide 59: Stronger Underlying Business Than Expected
STRONGER UNDERLYING BUSINESS THAN EXPECTED FY 2024 GUIDANCE: OPERATING PROFIT INITIAL GUIDANCE LATEST GUIDANCE MARCH 13 OCTOBER 15 +€ 700 MILLION ~€ 1.2BN ADIDAS AG € 550M ~€ 500M € 150M BETTER UNDERLYING YEEZY DROP BUSINESS (ALREADY REALIZED) 59
Slide 60: 60
60
Slide 61: Global Brand with a Local Mindset
GREATER CHINA EUROPE NORTH GLOBAL BRAND AMERICA SOUTH KOREA JAPAN WITH A LOCAL MINDSET LATIN EMERGING AMERICA MARKETS 61
Slide 62: Global Brand with a Local Mindset
GLOBAL BRAND WITH A LOCAL MINDSET GREATER CHINA EUROPE NORTH AMERICA SOUTH KOREA JAPAN LATIN EMERGING AMERICA MARKETS 62
Slide 63: Better Company, Good Company
ADIDAS AG 2023 2024 2025 BETTER COMPANY BREAK EVEN GOOD COMPANY COMPANY AND TRANSITION 63
Slide 64: We Will Be a Good Company
2025 WE WILL BE A GOOD COMPANY 64
Slide 65: 2025: Gross Margin, MWB and OOH Targets
~ 50-52% GROSS MARGIN ADIDAS AG ~ 12% MWB 2023 2024 2025 2026 ~ 30% OOH BETTER HEALTHY COMPANY COMPANY BREAK EVEN GOOD COMPANY COMPANY AND TRANSITION 65
Slide 66: Organization Updates
ORGANIZATION UPDATES
Slide 67: Adidas AG
ADIDAS AG 67
Slide 68: Organization Set-Up as of November 2024
ORGANIZATION SET-UP adidas Executive Board AS OF NOVEMBER 2024 BJØRN GULDEN CEO & GLOBAL BRANDS ADIDAS AG MICHELLE ROBERTSON HARM OHLMEYER MATHIEU SIDOKPOHOU HOA LY GLOBAL HUMAN RESOURCES, FINANCE, SUPPLY CHAIN & TECH GLOBAL SALES SOURCING & PRODUCT OPERATIONS PEOPLE & CULTURE 68
Slide 69: Investor Relations Contacts
ADIDAS AG JAN RUNAU, SEBASTIAN STEFFEN, CHIEF CORPORATE SVP INVESTOR RELATIONS & COMMUNICATION OFFICER CORPORATE COMMUNICATION 69
Slide 70: Q&A
Q&A