😎 Summer Sale Exclusive - Up to 50% off AI-powered stock picks by InvestingProCLAIM SALE

Adidas 2025 targets 'wildly out of reach' - Bernstein

Published 2023/02/28, 15:44
© Reuters.

By Sam Boughedda 

Bernstein analysts said in a note to clients on Tuesday that regardless of whether Yeezy comes or goes, Adidas AG's  (ETR:ADSGN) current 2025 targets are out of reach.

The analysts explained that Yeezy and Adidas' 7-year partnership ended this year, and although Adidas owns the Adidas Yeezy IP, management does not plan to continue selling the brand.

"We expect the franchise to be completely terminated, including no resale of existing product and a resulting €500m writeoff — a clean slate with minimal risk to the Adidas brand," they wrote.

Bernstein calculates that the Yeezy business tripled in size from 2017 to 2022, from 500 million to a 1.7 billion run rate — 7% of Adidas brand sales.

However, even with Yeezy, Bernstein said Adidas wouldn't have been able to meet their 2025 targets.

"With Yeezy, would Adidas have been able to meet their 2025 targets? Not by a long-shot. Due to a mix of external factors (e.g. China lockdowns) and internal (e.g. basketball launch delays), the targets set in 2021 now seem wildly out of reach. Even with Yeezy, Adidas brand sales would have only grown at a 5.6% 4-yr CAGR (vs. 8-10% avg. target) and EBIT margin would have been 10.2% (vs. 12-14% target)," the analysts added.

As a result, they expect to see Adidas' medium-term targets reset this year.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.