adidas today announced preliminary results for the third quarter of 2023, which beat analyst expectations. Currency-neutral revenues increased 1% versus the prior year level, while the company's gross margin improved 0.2 percentage points to 49.3%. Operating profit reached €409 million during the quarter, reflecting an operating margin of 6.8%.
The company's performance in the quarter was positively impacted by the sale of parts of its remaining Yeezy inventory, but the underlying adidas business also developed better than expected. As a result, the company has updated its full-year guidance: adidas now expects currency-neutral revenues to decline at a low-single-digit rate in 2023 (previously: decline at a mid-single-digit rate).
At the same time, the company's underlying operating profit – excluding any one-offs related to Yeezy and the ongoing strategic review – is now anticipated to reach a level of around €100 million in 2023 (previously: around break-even level).
Overall, the results are a positive sign for adidas, as the company seems to be on track to recover from the impact of the COVID-19 pandemic and the Yeezy controversy.
The company's updated full-year guidance is also encouraging, as it suggests that adidas is confident in its ability to deliver profitability in 2023.