Adidas Reports Strongest China Sales Since Early 2022

 Adidas Samba and Gazelle sneakers for sale are seen at a shop in Berlin, Germany, May 2, 2024. (Reuters)
Adidas Samba and Gazelle sneakers for sale are seen at a shop in Berlin, Germany, May 2, 2024. (Reuters)
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Adidas Reports Strongest China Sales Since Early 2022

 Adidas Samba and Gazelle sneakers for sale are seen at a shop in Berlin, Germany, May 2, 2024. (Reuters)
Adidas Samba and Gazelle sneakers for sale are seen at a shop in Berlin, Germany, May 2, 2024. (Reuters)

Adidas saw strong growth in Greater China in the third quarter, while sales in North America excluding Yeezy shoes were up on the year thanks to improving brand image.

Adidas' performance in China contrasts with other companies that are struggling with weak consumer demand and a likely longer wait for government stimulus measures to boost confidence.

Currency-neutral quarterly sales rose 9% to 946 million euros ($1.02 billion) in Greater China, up from 870 million euros a year earlier, the company said on Tuesday - its strongest quarterly sales in China since the start of 2022.

Adidas shares gained 1.7% in early trading, despite a filing announcing top shareholder Groupe Bruxelles Lambert cut its stake. Adidas had already released preliminary figures and hiked its annual sales and profit guidance earlier this month.

A trend for Adidas' "terrace" shoes, retro models inspired by soccer fans' footwear in the 1970s and 80s, has driven sales at the German sportswear company, helping it gain market share over rivals such as Nike and recover from a bruising break-up with rapper Kanye West, who goes by Ye.

"In lifestyle, management is avoiding overflowing the market with Campus and Terrace," said Stifel analyst Cedric Lecasble, adding that Adidas is pushing its SL72 shoes and "low profile" sneakers such as its Taekwondo model.

In North America, Adidas' second-biggest market behind Europe, the Middle East and Africa, currency-neutral sales were down 7% at 1.36 billion euros in the third quarter, but increased from the previous year when excluding Yeezy, the company said.

The results are the latest evidence of a revival in the company's fortunes almost two years after CEO Bjorn Gulden joined the German brand. Gulden has overseen the sales of Adidas' stock of Yeezy shoes left unsold after cutting ties with the rapper, its former design partner.

Adidas' wholesale business - revenue made by selling product through third-party retailers - grew 13% in the third quarter, while direct to consumer sales grew 7%.

The company's gross margin increased by 2 percentage points compared to a year ago, at 51.3% - an impressive result, Jefferies analysts said, given the wholesale channel is generally less profitable.

Adidas has taken shelf space from Nike at multi-brand retailers such as Foot Locker and JD Sports thanks to the trend for its multi-colored sneakers, while its US rival has seen sales fall.



Hermes Q3 Sales Up 11.3%, Continues to Outshine Rivals

A logo of Hermes is seen on a store in Nantes, France, October 17, 2024. REUTERS/Stephane Mahe
A logo of Hermes is seen on a store in Nantes, France, October 17, 2024. REUTERS/Stephane Mahe
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Hermes Q3 Sales Up 11.3%, Continues to Outshine Rivals

A logo of Hermes is seen on a store in Nantes, France, October 17, 2024. REUTERS/Stephane Mahe
A logo of Hermes is seen on a store in Nantes, France, October 17, 2024. REUTERS/Stephane Mahe

Birkin bag maker Hermes reported on Thursday an 11.3% rise in third-quarter sales, continuing to outshine rivals hit hard by a downturn in China as its luxury handbags lure wealthy shoppers.

The French luxury company generated 3.7 billion euros ($3.99 billion) in revenue for the three months ending in September, an 11.3% rise at constant exchange rates, Reuters reported.

The figure was in line with an analyst consensus estimate of 11% growth cited by Jefferies.
"In a more uncertain economic and geopolitical context, I want to thank all employees for the robust third-quarter performance, and our customers for their loyalty," said Axel Dumas, Executive Chairman of Hermes.
"Thanks to the singularity of its model, Hermes is continuing its recruitments and long-term investments," he said in a statement.
A sector-wide slowdown has affected labels across the high-end spectrum.
Luxury bellwether LVMH missed expectations last week and flagged a drop in Chinese consumer confidence to COVID-era lows, with a deterioration in demand for fashion over the quarter.
Late on Wednesday, Kering warned its 2024 operating income would almost halve to its lowest in years as weak demand in China deepened the struggles of the French luxury goods group's main label Gucci.
Hermes' famously classic designs and tight management of production and stock have helped reinforce the label's aura of exclusivity and made the company one of the most consistent performers in the industry.
Handbags like the coveted $10,000 plus Birkin model are affordable only for the wealthiest shoppers -- who are typically the more immune to choppy economic conditions.
But showing limits of its resilience, executives earlier this year said that Hermes was seeing slightly less traffic from aspirational clients, impacting higher volume products like fashion accessories such as silk scarves.
Hermes shares have risen nearly 9% since the start of the year, outpacing rivals, with LVMH down nearly 15%, Moncler down 3.3% and Kering, which is working to turn around Gucci, down 40%.