Adidas has revised its 2024 guidance upwards, signalling optimism in a challenging global economy. The German sportswear giant has raised its revenue growth expectations by 5% to 10%, reflecting its confidence in delivering improved financial results in the coming year. With sales forecasted to hit €24 billion by the end of 2024, Adidas is positioning itself for a strong recovery after a difficult period. But what factors are driving this improved outlook?
Strong Recovery in Core Markets
A primary factor behind Adidas’ decision to increase its 2024 guidance is its robust recovery in key markets like North America and Europe. In Q3 2023, Adidas reported 8% growth in these regions, largely driven by increasing demand for its popular lifestyle and performance products.
Adidas has doubled down on its direct to consumer strategy, with DTC sales accounting for 38% of total revenues. The brand’s e-commerce platform, in particular, saw 12% year on year growth, benefiting from investments in technology and improved user experience. By boosting its online channels, Adidas has successfully tapped into shifting consumer behaviour, with more customers opting for online purchases.
Easing of Supply Chain Issues
After a significant drop in sales during the pandemic due to supply chain disruptions, Adidas is finally bouncing back. In 2022, the company struggled with inventory shortages, particularly in its footwear segment. However, by the end of 2023, Adidas has managed to stabilise its supply chain, and these improvements are reflected in its increased inventory turnover rate. The company has also expanded its supplier network, reducing its reliance on single source production hubs.
The result? Adidas is better equipped to meet growing consumer demand, particularly in high growth areas like Asia, where the brand expects double digit sales growth in 2024.
Commitment to Sustainability
Sustainability continues to be a driving force behind Adidas’ growth. The brand aims for 90% of its products to be made from sustainable materials by 2025, a target that resonates with eco conscious consumers. Adidas has also committed to reducing its carbon footprint by 30% by 2030, an move that strengthens its reputation as a sustainability leader in the sportswear sector.
In Q2 2023, sales of Adidas’ eco friendly products increased by 15%, driven by demand for the brand’s “Primegreen” and “Parley” collections, made from recycled ocean plastics. This focus on sustainability is not only good for the planet but also a key driver of consumer loyalty and long term revenue growth.
What Does This Mean for Investors?
Adidas’ improved outlook for 2024 suggests that it’s on a steady path to recovery, making it a solid investment choice. The brand’s focus on digital expansion, supply chain resilience, and sustainability signals long term growth potential. Adidas shares have already seen a 10% rise over the past six months, and with its 2024 forecast, this trend is likely to continue.
With its financial forecast for 2024 lifted, Adidas is positioning itself as a key player in the global sportswear market. By focusing on market recovery, digital sales, and sustainability, Adidas is setting itself up for strong, continued growth something both investors and consumers can get behind.
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