Adidas AG Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Edouard Aubin - Morgan Stanley - Analyst : Congratulations, Sebastian, great news. So two questions for me. Bjorn, on, on the top line first, I know it's very premature to talk about 2025 guidance. So I'm not going to ask you for this. But if you look at out of the next four to six quarters, what's your sense in terms of your ability to more or less maintain the current underlying top line growth that you've posted in Q3. I don't know if you're willing to enable to comment on that? So that's question number one. And then question number two is, it seems that Adidas as an organization is casting a wider net, so to speak, in terms of your presence in terms of distribution channels in terms of sports, you talked about US sports in terms of offering more SKUs, more price points with the takedown and so on. So to what -- so obviously, that's going to have a positive impact on top line, hopefully. But to what extent that could negatively impact your profitability and your ability to reach a 10% plus EBIT margin in the medium term?

Question: Zuzanna Pusz - UBS Equities - Analyst : Congratulations to Sebastian. So just maybe, first of all, North America. So you returned to growth, I think, faster than was anticipated. So any chance you could maybe share with us what has driven that would you say is it overall the market? Or was it more brand specific? And if so, what type of products have driven that? So any incremental color on that would be very helpful. And then second, I would say, question is on OpEx. So, Harm, it was very helpful, you shared with us some of the drivers in some of the, let's say, moving parts within OpEx,-But I think we've seen some news flow about I think you closing the Runtastic offices in Austria in a couple of other bits. So were there perhaps any other special items, one-off maybe restructuring costs and OpEx that we haven't discussed so far? And just a very quick follow-up. So it's not a question. the double-digit growth for sales that you mentioned for next year and let's say, going forward, is it ex-YEEZY or with YEEZY. So that's just a clarification.

Question: Piral Dadhania - RBC Capital Markets - Analyst : So my first question is just on EBIT guide. The full year EUR1.2 billion guide implies a breakeven Q4 number. I take on board everything you've said. However, I just wanted to understand whether there is conservatism baked into that and whether we should just straight reverse the $100 million IAS 29 impact in the prior year, which becomes a straight benefit of the same amount? My second question is also a financial one. Apologies, but the CapEx run rate for the nine-month period is EUR300 million. However, I think you've guided on a full year basis to EUR600 million. So could you just help us understand whether you plan to spend the remaining EUR300 million in a single 4Q period? Or whether that CapEx number on a full year basis could land below guidance? And just following up on Zuzanna 's question, I don't think you answered her third question on whether the 10% growth is in core ex-YEEZY. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2024 / 2:00PM, ADSGn.DE - Q3 2024 Adidas AG Earnings Call

Question: Jurgen Kolb - Kepler Cheuvreux - Analyst : Sebastian congrats, first of all, all communication now in your hands also Congress to Jan, obviously, for having been for such a long time at a company. quite unusual. Two questions from my side. First one maybe for Ham. After normalization of the tax rate, working capital doing fine, EBIT growing so cash generation seems to really speed up. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2024 / 2:00PM, ADSGn.DE - Q3 2024 Adidas AG Earnings Call Can you remind us on your stance when it comes to share buyback and what criteria should be fulfilled to maybe revive the share buyback program? And the second one for Bjorn, you mentioned you're seeing that Adidas is gaining another generation. Maybe you can elaborate a little bit on that. Is that rather an age group? Is that more fashionable customers? Is it on a regional basis? Or what have you seen here that you can maybe provide us with additional information on what that really means.

Question: Jurgen Kolb - Kepler Cheuvreux - Analyst : Very wise investments.

Question: Alexander Okines - BNP Paribas Exane - Analyst : Bjorn, I just wanted to go back to the comments you made on the last conference call when you said you had pulled forward inventory and you thought you might struggle with supply. Could you just talk about how you manage this in Q3 and how you're managing it into Q4? And then my second question is just around the progress you're making winning shelf space in specialty running, perhaps comment on any progress you've made in the last quarter or two?

Question: Monique Pollard - Citi - Analyst : SP-11 One from me, if I can. Firstly, on inventory. Obviously, you've talked about clearly your inventory being in a really good position, and Bjorn, you just mentioned being happy with the level of inventory in terms of fulfilling the future demand. I think a comment that's been mentioned this morning was at about 80% of the inventory you have on book now is the current or future season product. And I just wanted to get a sense of how that compares historically and what that could mean for full price realization. And then the second question, just a question for you, Harm, on the tax rates going forward. I think you'd made a comment when we were going through the presentation that you were suggesting that the level of the current tax rate is where we should expect going forward. Is that right? Is that how I should understand that the 3Q tax rate should be the level as we go into next year?

Question: Geoff Lowery - Redburn Atlantic - Analyst : Just a two-part question, please, on North America. Firstly, I was very struck that you made more money in LatAm on approximately half of the revenue in this quarter. Is the answer for US profitability in the end, simply sales and scale? Or are there improvements in the operating model and/or gross margin that you can deliver? And second, could you talk about the tariffs trend and where we are with it in North America specifically, please? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2024 / 2:00PM, ADSGn.DE - Q3 2024 Adidas AG Earnings Call

Question: Adam Cochrane - Deutsche Bank - Analyst : First question is in terms of your good pipeline, you've got a good inventory position. But given how much benefit you've had from better full price

Question: Aurelie Husson-Dumoutier - HSBC - Analyst : Yes. I have two as well. The first one is on current trading by region. And any big discrepancy to signal versus Q3 any market becoming more or less promotional give us an idea of what's going on in October, that would be great. And my second question is on the tariff trend that has been a key growth driver in the recent quarters. Could you give us an idea of how much category or the family of products represents in total group sales? Is it mid-single digit, high single digit, double digit? Any color on that would be very useful. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2024 / 2:00PM, ADSGn.DE - Q3 2024 Adidas AG Earnings Call