adidas reports strong results for 2024 and expects top- and bottom-line momentum to continue in 2025

Major developments FY 2024:

• Currency-neutral sales increase 12%; significantly better than initially expected
• Gross margin improves 3.3pp to 50.8% despite significant negative currency effects
• Operating profit increases by more than € 1 billion to € 1,337 million
• Net income from continuing operations reaches € 824 million
• Healthy inventories at € 5.0 billion to support double-digit growth of adidas brand
• Executive and Supervisory Boards propose dividend increase to € 2.00 per share

Major developments Q4 2024:

• Currency-neutral revenues increase 19% reflecting double-digit growth in Europe, North America, Greater China, Emerging Markets and Latin America
• Gross margin improves 5.2pp to 49.8% due to lower product and freight costs, more favorable business mix as well as reduced discounting
• Operating profit of € 57 million compared to prior-year loss of € 377 million

Outlook for FY 2025:

• Currency-neutral revenues to increase at a high-single-digit rate, reflecting continued double-digit growth for the adidas brand
• Operating profit to increase to a level of between € 1.7 billion and € 1.8 billion
• Outlook does not include any Yeezy revenues or profits in 2025

adidas CEO Bjørn Gulden:

“I am very pleased the way the fourth quarter and the full year developed for us at adidas. We grew double digits in 2024 (+12% currency-neutral) and improved our operating profit by more than € 1 billion to € 1.337 billion. This development was much better than we had expected, and we are of course very pleased with this.

Although we are not yet where we want to be long term, it was a very successful year that confirmed the strength of the adidas brand, the potential of our company and what a fantastic job our teams are doing. We still have a lot to improve but I am very proud of what our people achieved in 2024.

Going from single-digit growth at the beginning of the year to 19% currency-neutral growth in a fourth quarter, that in general was difficult for the trade, underlines the strong momentum we currently see for our brand and our products. We clearly see that consumers’ and retailers’ interest is growing across both Lifestyle and Performance and also across all markets. This has only been possible because of our attitude of going into the market with what is relevant for the local consumer. Growing double digits in Europe and also in Greater China, in a tough environment, or starting to grow double digits in Q4 in North America, wouldn’t have been possible without this attitude.

We also feel good about the future, and we see potential to increase our market share in all markets. I think for 2025 we are in very good shape. I am confident we have the product pipeline and marketing plans to continue to drive brand heat globally. Of course there is a lot of macroeconomic uncertainty right now, but with products that we think are on trend and the attitude of being agile and more local, I cannot see why we should not be successful. That’s why I think we will again grow at least 10% with the adidas brand in 2025 and use this growth to continue to improve our operating profit to between €1.7 and €1.8 billion. This means we will again make progress on our way to become a healthy company with a 10% operating margin.

With all the challenges out there, let’s not forget that there are so many fun things to look forward to in 2025. Personally, I look forward to see a continuous improvement in what we do and see the team feel they are improving and winning.”

Full-year results

Acceleration to double-digit revenue growth in 2024

The company’s top line accelerated meaningfully during 2024 and currency-neutral revenues increased 12% compared to the prior year. This was significantly better than the initially expected mid-single-digit increase and also ahead of the company’s latest guidance provided in October, which had projected growth of around 10%. The double-digit growth reflects the strong momentum of the adidas brand, which increased 13% in 2024. The sale of the remaining Yeezy inventory, which was successfully concluded during the fourth quarter, generated revenues of around € 650 million in the year (2023: around € 750 million). In euro terms, revenues increased 11% to € 23,683 million in 2024 (2023: € 21,427 million).

Footwear-led growth reflecting strong brand and product momentum

Footwear led the company’s growth with a currency-neutral increase of 17%, driven by strong double-digit growth in Originals, Football, and Training. During the year, the company successfully broadened its footwear offering across a wider range of price points to meet consumer needs, leading to double-digit growth in Sportswear. In addition, increases in Running and Performance Basketball contributed to the broad-based growth in footwear. Apparel revenues grew 6% in 2024. While the development in the first half was still impacted by a relatively conservative sell-in approach, particularly in North America, the company began to introduce differentiated apparel ranges during the course of the year. Apparel revenues in Originals benefited from the increasing popularity of the Three Stripes through offerings such as Adicolor and Firebird. In addition, as part of its strategy to create a bigger lifestyle business in Football, adidas successfully launched retro-inspired third jerseys featuring the iconic Trefoil logo. In Sportswear, newly introduced collections such as the brand’s innovative Z.N.E. range generated strong sell-throughs and led to a significant top-line acceleration towards the end of the year. Accessories sales were up 2% reflecting  significant improvements in the second half of the year. Across all product divisions, the global range was complemented by an assortment of locally relevant product that resonated well with consumers across markets.

Momentum broadening across categories

The broad-based demand for adidas products was also evident from a category perspective with strong growth in both Lifestyle and Performance. In Lifestyle, currency-neutral revenues increased at a double-digit rate as a result of strong double-digit growth in Originals. Next to additional newness and depth for its iconic Samba, Gazelle, Handball Spezial, and Campus products, the company introduced and started to scale volumes in Retro Running with the SL72 and incubated franchises in the Low Profile domain, such as Tokyo and Japan. To leverage its successful Originals range with a larger group of consumers, adidas began to scale commercial footwear propositions in Sportswear and also introduced innovative concepts in apparel, both leading to a significant top-line acceleration in Sportswear during the second half of the year. Demand for the overall Lifestyle offering continued to be fueled by collaborations with partners such as Bad Bunny, Wales Bonner, or Edison Chen. On the Performance side, several categories contributed to high-single-digit currency-neutral growth. This was led by strong double-digit growth in Football, where adidas launched new iterations of the iconic Predator boots and reintroduced its F50 franchise, activated by brand partners including Lamine Yamal, Jude Bellingham, and David Beckham. Strong growth in the Football kit business was driven by jersey sales related to the UEFA EURO 2024 and the CONMEBOL Copa América, with the adidas teams Spain and Argentina winning the tournaments. In Running, the company continued to generate strong double-digit growth with its record-breaking Adizero running shoe family. In addition, the completely revamped offering for everyday runners with the newly launched Supernova, Ultraboost, and Adistar franchises led to increased shelf space allocation from key retailers and significant top-line growth in the second half of the year. adidas also benefited from increased demand for its basketball signature shoe models, led by Anthony Edwards’ award-winning AE1, and recorded growth in Training, following the launch of its Dropset 3 shoe for gym enthusiasts.

Strong growth across all channels

Double-digit growth in both wholesale as well as across all of the company’s direct-to-consumer (DTC) channels underlines the strong demand for adidas products. On a currency-neutral basis, wholesale revenues increased 14%, reflecting strong sell-throughs and, as a result, significantly increased shelf space allocation. Revenues in DTC grew 11% (+16% excluding Yeezy). Within the DTC channel, own retail recorded growth of 15% versus the prior year, driven by the strong sell-out rates in the company’s concept stores. E-commerce revenues increased 6% (+18% excluding Yeezy). Growth in full-price sales was significantly stronger as adidas continued to focus on reducing discounting activity and improving the overall business mix on its own online platforms.

Double-digit growth in almost all markets

In Europe, the company’s largest market, currency-neutral net sales increased 19% in 2024, reflecting strong double-digit growth in both wholesale and DTC. The double-digit improvements in Greater China (+10%), Emerging Markets (+19%) and Latin America (+28%) were also driven by broad-based growth across the channels. In Japan/South Korea, revenues increased 10% reflecting particularly strong improvements in the company’s DTC business. Sales in North America declined 2% solely due to significantly lower Yeezy sales. In addition, the company’s conservative sell-in approach to the wholesale channel in response to still elevated inventory levels in this market weighed on the top-line development in 2024. As these anticipated headwinds moderated toward the end of the year, adidas started to grow double digits in North America in the fourth quarter.

Gross margin up significantly to 50.8%

The company’s gross margin increased 3.3 percentage points to 50.8% in 2024 (2023: 47.5%). The improvement was mainly driven by lower freight and product costs, a more favorable business mix, and reduced discounting. In contrast, negative currency effects weighed significantly on the gross margin, particularly in the first half of the year.

Increase in other operating income neutralized by further donations

Other operating income increased to € 174 million from € 71 million in 2023. The increase mainly reflects the release of prior year’s accruals in the third quarter of 2024 in an amount of around € 100 million following the Yeezy settlement. This was offset by provisions in a similar amount for further donations, which were recorded within operating overhead expenses in Q3. As a result, these non-recurring items did not have any material impact on the company’s operating profit in 2024.

Other operating expenses growing slower than revenues

In 2024, other operating expenses were up 9% to € 10,945 million (2023: € 10,070 million). As a percentage of sales, other operating expenses decreased 0.8 percentage points to 46.2% from 47.0% in 2023. Marketing and point-of-sale expenses increased 12% to € 2,841 million in 2024 (2023: € 2,528 million). The company continued its marketing investments to support its global brand campaign ‘You Got This’ and impactful activations around the Super Bowl, the UEFA EURO 2024, the CONMEBOL Copa América as well as the Olympic and Paralympic Games in Paris. In addition, adidas strongly supported new product launches such as the re-introduction of the F50 football boot, the Supernova running franchise or the Z.N.E. apparel range. Furthermore, adidas broadened its brand partner portfolio, with new additions such as the French Rugby Federation, Texas Tech University, and Aston Villa F.C. or individual athletes like Aitana Bonmatí, Lamine Yamal, and Travis Hunter. As a percentage of sales, marketing and point-of-sale expenses increased 0.2 percentage points to 12.0% (2023: 11.8%). Operating overhead expenses increased 7% to € 8,103 million (2023: € 7,541 million). This development reflects ongoing investments aimed at strengthening the company’s sales activities as well as provisions for further donations in an amount of around € 100 million. In addition, operating overhead expenses include one-off costs of around € 200 million, of which the majority were recorded in the fourth quarter. As a percentage of sales, operating overhead expenses decreased 1.0 percentage point to 34.2% from 35.2% in 2023.

Operating profit reaches € 1,337 million

The company’s operating profit increased by more than € 1 billion and reached € 1,337 million in 2024 (2023: € 268 million). The sale of the remaining Yeezy inventory in the course of 2024 contributed around € 200 million to the operating profit development (2023: around € 300 million). The operating margin was 5.6% in 2024, 4.4 percentage points above the prior-year level (2023: 1.3%).

Net financial result stable while tax rate normalizes

Financial income increased 28% to € 101 million in 2024 (2023: € 79 million), mainly reflecting higher interest income. Financial expenses were up 12% to € 317 million compared to € 282 million in 2023. This development was mainly driven by higher financing costs in some markets, partly offset by lower negative effects related to hyperinflation countries. As a result, the company’s net financial result was largely stable at negative € 215 million (2023: negative € 203 million). The company’s tax rate decreased to 26.5% in 2024 (2023: 189.2%), reflecting the normalization of profitability levels throughout the year.

Net income from continuing operations improves to € 824 million

Driven by significant business improvements in 2024, net income from continuing operations improved strongly to € 824 million (2023: net loss of € 58 million). As a result, both basic and diluted earnings per share (EPS) from continuing operations reached € 4.24 (2023: negative € 0.67).

Average operating working capital as a percentage of sales down significantly to 19.7%

Inventories increased 10% to € 4,989 million at the end of December 2024 (2023: € 4,525 million) to support continued double-digit growth of the adidas brand in 2025. On a currency-neutral basis, inventories increased 11%. Accounts receivable increased 27% to € 2,413 million at the end of December 2024 (2023: € 1,906 million), mainly reflecting higher sell-in and a more sizable wholesale business compared to the prior year. On a currency-neutral basis, receivables were up 26%. Accounts payable increased 36% to € 3,096 million at the end of December 2024 versus € 2,276 million in 2023, mainly reflecting higher sourcing volumes. On a currency-neutral basis, accounts payable were also up 36%. Average operating working capital as a percentage of sales decreased 5.9 percentage points to 19.7% (2023: 25.7%), reflecting the slight increase of average operating working capital against the background of significantly higher net sales.

Continuous investments into the business

The company’s capital expenditure increased 7% to € 540 million in 2024 (2023: € 504 million). Investments in new or remodeled own retail or franchise stores as well as shop-in-shop presentations of adidas products in customers’ stores represented half of the total. The remainder consisted of investments in IT as well as the company’s administration and logistics infrastructure.

Leverage ratio improves significantly to 1.5x

Adjusted net borrowings on December 31, 2024, decreased to € 3,622 million from € 4,518 million in 2023 and the company’s ratio of adjusted net borrowings over EBITDA improved strongly to 1.5x (2023: 3.3x).

Management proposes dividend payment of € 2.00 per share

The adidas AG Executive and Supervisory Boards will recommend paying a dividend of € 2.00 per dividend-entitled share to shareholders at the Annual General Meeting on May 15, 2025 (2024: € 0.70). The total payout of € 357 million (2024: € 125 million) reflects a payout ratio of 43% of net income from continuing operations. The proposal reflects the company’s significantly better-than-expected performance in 2024, its improved financial profile, as well as Management’s confident outlook for the future. This payout ratio is within the target range of between 30% to 50% of net income from continuing operations.

Fourth-quarter results

Currency-neutral revenues up strong double digits in the fourth quarter of 2024

Currency-neutral revenues increased 19% during the fourth quarter. The adidas brand grew 18%, reflecting strong growth across all markets, channels and product divisions. The sale of the remaining Yeezy inventory generated revenues of around € 50 million in the quarter. In euro terms, revenues grew 24% to € 5,965 million (2023: € 4,812 million).

Double-digit growth in both footwear and apparel

Footwear revenues increased 26% on a currency-neutral basis during the quarter, led by strong double-digit growth in Originals, Football, Training, Performance Basketball and Sportswear. In Sportswear, the brand’s expanded commercial footwear offering resonated strongly with consumers, while several other categories, notably Running, also accelerated in response to revamped product ranges introduced for the fall/winter season. As a result, double-digit increases in Running, Golf, and Specialist Sports also contributed significantly to the broad-based growth in footwear. Apparel sales were up 11%, driven by double-digit growth in Football, Running, Golf, and Sportswear. In addition, several other categories posted significant growth in apparel, including Originals and Basketball. Also in apparel, consumers and partners responded positively to improved product ranges, leading to an acceleration of growth across several categories. Accessories continued to grow and increased 7% during the quarter.

Double-digit increases in Lifestyle and Performance

On a currency-neutral basis, Lifestyle revenues increased strong double digits in the fourth quarter. The company continued to drive newness and depth across its popular Terrace range and Campus franchise, and continued to scale volumes for its iconic SL72 model. In the Low Profile domain, franchises such as Tokyo and Japan were incubated with a market-by-market approach. In addition, adidas launched Climacool, an entirely 3D-printed shoe that opens new possibilities in design innovation and continued to incubate Megaride and Aruku, expanding its portfolio of modern silhouettes in Lifestyle. In Sportswear, the company recorded double-digit growth across product divisions. Next to successful Sportswear footwear franchises, the company also benefited from the introduction of its revamped adidas Essentials apparel range with comfortable everyday pieces, starring Lionel Messi and Antonela Roccuzzo in the activations. Collaborations with partners such as Stella McCartney, Sporty & Rich, Bape, and Korn continued to drive demand for the overall Lifestyle offering. Performance also posted another double-digit revenue increase. In Football, adidas increased the visibility for its Predator and F50 franchises through the launch of new packs and colorways, such as the F50 Two Horizons, which pays tribute to the contributions of Arabic players to the world of football. In addition, adidas further expanded the lifestyle offering for its major European football clubs with apparel pieces featuring the iconic Trefoil logo. In Running, adidas continued to leverage the credibility of its record-breaking Adizero shoe family for everyday runners, for example with the newly launched Supernova Rise, and successfully seeded the Evo SL ahead of its commercial launch. Several other Performance categories, including Training, Performance Basketball, Golf, and Specialist Sports also contributed to the revenue increase driven by technical product innovation, such as the launch of Crazyquick – adidas first dedicated padel footwear franchise – or the new Adizero Ubersonic in tennis.

Double-digit growth across all channels

The strong demand for adidas products was also reflected in double-digit growth across all channels. On a currency-neutral basis, wholesale revenues increased 25%, while direct-to-consumer (DTC) sales were up 15%. Within DTC, own retail posted growth of 18%, reflecting strong double-digit growth in both concept stores and factory outlets. E-commerce revenues increased 10% amid an ongoing focus on full-price sales on the company’s online platforms.

North America and Greater China return to double-digit top-line growth

Currency-neutral net sales continued to grow at strong double-digit rates in Europe (+25%), Emerging Markets (+21%), and Latin America (+31%). In addition, top-line growth significantly accelerated in both Greater China and North America to 16% and 15%, respectively. In both markets, the growth was broad-based reflecting double-digit improvements in the wholesale channel as well as the company’s own retail stores. Revenues in Japan/South Korea grew 9% in the fourth quarter.

Gross margin improves significantly to 49.8%

The company’s gross margin increased 5.2 percentage points to 49.8% during the fourth quarter (2023: 44.6%). The improvement was mainly driven by lower product and freight costs, a more favorable business mix, as well as reduced discounting. As expected, negative currency effects faded during the fourth quarter.

Royalties and other operating income

Royalty and commission income increased to € 26 million (2023: € 17 million), while other operating income increased to € 53 million (2023: € 10 million), mainly due to the sale of a warehouse in North America.

Continued investments into brand and business

Other operating expenses increased by 17% to € 2,992 million (2023: € 2,551 million). As a percentage of sales, other operating expenses decreased 2.9 percentage points to 50.2% (2023: 53.0%). Marketing and point-of-sale expenses were up 13% to € 754 million in the quarter (2023: € 666 million). The increase reflects continued investments into the global brand campaign ‘You Got This,’ investments into the brand’s partner portfolio with signings of, for example, Kaleena Smith and Grigor Dimitrov, as well as support for new product launches such as the adidas Essentials apparel range. As a percentage of sales, marketing and point-of-sale expenses were down 1.2 percentage points to 12.6% (2023: 13.8%). Operating overhead expenses grew 19% to € 2,238 million (2023: € 1,885 million), reflecting ongoing investments aimed at strengthening the company’s sales activities and one-off costs of around € 150 million. As a percentage of sales, operating overhead expenses decreased 1.7 percentage points to 37.5% (2023: 39.2%).

Operating profit of € 57 million

The company’s operating profit amounted to € 57 million compared to an operating loss of € 377 million in the prior year. The sale of the remaining Yeezy inventory contributed an immaterial amount to the company’s operating profit in the fourth quarter. Net financial expenses increased to € 86 million (2023: € 38 million), mainly due to higher financing costs in select countries and negative currency impacts. Against a loss before taxes of € 29 million (2023: loss of € 415 million), the company recorded income taxes of negative € 2 million (2023: negative € 14 million). As a result, the company’s net loss from continuing operations amounted to € 27 million in the fourth quarter (2023: net loss of € 401 million). Basic and diluted EPS from continuing operations were negative € 0.26 (2023: negative € 2.36).

Outlook for 2025

Currency-neutral sales to increase at a high-single-digit rate in 2025

Despite persisting macroeconomic and geopolitical challenges, adidas expects to gain further market share and grow the company’s currency-neutral sales at a high-single-digit rate in 2025. This reflects continued double-digit growth for the adidas brand. A significantly better, broader, and deeper product range combined with an increased focus on local consumer preferences as well as much improved retailer relationships will be the main drivers of the projected top-line increase. In addition, impactful marketing initiatives will further add to the company’s brand momentum and fuel the expected top-line growth.

Significant growth expected in all market segments

Currency-neutral revenues are projected to grow strongly in all markets in 2025. Specifically, the company expects sales for the adidas brand to grow at a double-digit rate in North America, Greater China, Emerging Markets, and Latin America. Revenues in Europe and Japan/South Korea are projected to increase at a high-single-digit rate.

Operating profit to increase further to between € 1.7 billion and € 1.8 billion

While adidas will continue to increase marketing and sales investments, operating overhead efficiencies will allow the company to leverage its strong top-line growth. In combination with continued gross margin expansion, this is expected to lead to further significant bottom-line improvements in 2025. As a result, the company projects operating profit to increase to a level of between € 1.7 billion and € 1.8 billion in 2025.

Having completed the sale of the remaining Yeezy inventory in 2024, the company’s outlook does not include any Yeezy revenues (2024: around € 650 million) or profits (2024: around € 200 million) in 2025.