ADDYY Adidas AG (QX)

By Joshua Kirby

Adidas is still looking at options for leftover Yeezy stock but continues to expects a major operating loss this year if it writes off the sneakers, it said Friday as it reported first-quarter sales that were a little better than expected.

Revenue in North America and Greater China remained negative on year in the first three months of the year, but the group total was flat, organically, at 5.27 billion euros ($5.80 billion). Analysts had expected a tally of EUR5.08 billion, according to a FactSet poll.

The effect of last year's breakup with Yeezy designer Kanye West dragged the top line, but sales in the EMEA region were positive and even more so in other regions, Adidas said.

The group booked a net loss from continuing operations of EUR24 million, with operating profit at EUR60 million. The gross margin contracted more than five points on the year to 44.8%, with Adidas pointing to supply costs and continued high inventory, though the situation has improved since year-end, it said.

Adidas didn't set out a decision on its remaining Yeezy stock, but said it still expects to book a EUR500 million operating loss this year from an eventual write-off. It also still expects EUR200 million in separate one-off costs as it looks to return to profitable growth next year.

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

(END) Dow Jones Newswires

May 05, 2023 02:00 ET (06:00 GMT)

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