Adidas stock trades near recent highs as revenue growth and margin recovery support the share

Adidas stock has been supported by improving fundamentals at the German sportswear group (ISIN DE000A1EWWW0), with recent double digit revenue growth and recovering margins helping to underpin the share price on Xetra.

Revenue up double digits

According to Adidas’ latest reported full year figures, the company generated revenue of around EUR 21.4 billion in fiscal 2023, representing a clear increase compared with roughly EUR 21.2 billion a year earlier as the group stabilized its core business across footwear and apparel.

Management has indicated in its recent outlook that it expects mid to high single digit revenue growth for the 2024 financial year, pointing to an acceleration compared with the flat to low growth environment that characterized parts of 2022 and 2023.

In the most recently reported quarter, Adidas highlighted that currency neutral revenue grew at a low double digit rate compared with the prior year period, driven by strong demand for lifestyle footwear and renewed momentum in performance categories.

Operating profit and margin recovery

Adidas’ operating performance has also improved: the company reported an operating profit of roughly EUR 1.0 billion for fiscal 2023 after a markedly weaker year in 2022 when restructuring charges and inventory clean up weighed on profitability.

This translated into an operating margin in the mid single digit range in 2023, up from a low single digit margin or near break even level in 2022, underlining the impact of better pricing, more disciplined promotions, and lower supply chain disruption.

For investors, a key metric is the gross margin, which Adidas reported back in a high forties percentage area for recent quarters, representing an improvement of several percentage points compared with the lows reached in 2022 when elevated freight and input costs compressed profitability.

Flagship footwear line performance

Adidas derives a substantial portion of its revenue from its flagship footwear lines, including running shoes, lifestyle sneakers and performance models used in football, basketball and other sports. In recent reporting periods, footwear has accounted for well over half of group sales, reflecting the brand’s positioning in global sportswear.

The company has highlighted that demand for classic lifestyle sneakers and newly refreshed models has contributed strongly to growth, with double digit increases in selected product families in key regions such as North America and Europe compared with the prior year.

Adidas stock and market context

Shares of Adidas are listed primarily on Xetra in Frankfurt, and the stock forms part of the DAX index, which tracks major German blue chip companies. Market data providers report that Adidas’ market capitalization is in the tens of billions of euros, placing the group among the larger global sportswear issuers by equity value.

Over the past twelve months, Adidas stock has traded in a wide range, with the share price recovering significantly from the lows of 2022 and moving closer to levels seen before the sharp downturn, supported by the improvement in revenue trends and profitability.