Adidas Shares Climb After Guidance Raise

Shares in Adidas gained 4% at the open on Wednesday after the sportswear company raised its guidance for the year in a surprise third-quarter results pre-release.

The German sportswear giant projected a full-year operating loss of 100 million euros ($106 million), a significant improvement on its previous forecast of a 450 million euro loss, and expects revenues to decline at a low-single-digit rate for 2023.

It is the second time this year Adidas has raised forecasts ahead of results as sales of its remaining stock of Yeezy shoes helped boost revenue.

Shares in Adidas are now up around 40% this year as investors gain confidence in CEO Bjorn Gulden's ability to turn the company around after it ended the lucrative Yeezy partnership with rapper Ye, formerly known as Kanye West, over his antisemitic comments.

Adidas has increased its production of the Samba and other "terrace" styles as it seeks to fuel a trend for the rubber-soled sneakers originally popular in the 1970s.

The German sportswear giant now sees currency-neutral revenues declining at a low-single-digit rate instead of a mid-single-digit rate in 2023, and underlying operating profit excluding the Yeezy sales should reach 100 million euros for the year, up from a break-even level.

Analysts believe that while the company’s performance in the quarter was again positively impacted by the sale of parts of its remaining Yeezy inventory, the underlying adidas business also developed better than expected.