Income Statement Information

adidas revenues on prior-year level in 2023

On a currency-neutral basis, revenues in 2023 were flat compared to the prior year. In euro terms, revenues declined 5% to € 21,427 million from € 22,511 million in 2022. Reported revenues incorporate negative translation impacts of more than € 1,000 million from unfavorable currency movements.

The top-line development in 2023 was impacted by significantly reduced sell-in to the wholesale channel as part of the company’s successful initiatives to reduce high inventory levels. In addition, the discontinuation of the Yeezy business represented a drag of around € 500 million on the year-over-year comparison during 2023. The sale of remaining Yeezy product in the second and third quarter positively impacted net sales in the amount of around € 750 million. This compared to a total of more than € 1,200 million of Yeezy revenues in 2022.

From a market perspective, currency-neutral sales increased strong double-digits in Latin America. Revenues in both Greater China and Asia-Pacific grew high-single-digits. Currency-neutral sales in EMEA were flat. North America recorded a double-digit decline as this market was particularly impacted by the company’s conservative sell-in strategy to reduce high inventory levels. SEE BUSINESS PERFORMANCE BY SEGMENT

Revenue development driven by growth in Performance

From a category perspective, currency-neutral revenues in Performance grew at a mid-single-digit rate. This growth was mainly driven by high-single-digit increases in Football, Outdoor, and Specialist Sports. Currency-neutral net sales declined in Lifestyle overall due to the Yeezy impact. However, revenues in Originals increased at a mid-single-digit rate, while sales in Basketball and Skateboarding grew at double-digit rates.

Net sales¹ € in millions

Net sales by segment¹ in %

Footwear drives sales growth in 2023

Despite the significant Yeezy impact, currency-neutral footwear sales were up 4% in 2023, mainly driven by double-digit growth in Football and high-single-digit growth in Originals. Apparel revenues were down 6% on a currency-neutral basis, as this product category was particularly impacted by the high inventory levels in the marketplace and the company’s disciplined sell-in to the wholesale channel in response to it. Nevertheless, apparel revenues in Outdoor and Basketball grew at double-digit rates and Golf posted high-single-digit growth. Currency-neutral accessories and gear sales were up 3%, mainly reflecting a double-digit increase in Football. 

Net sales by product category in %

Cost of sales decreases in line with net sales development

Cost of sales is defined as the amount we pay to third parties for expenses associated with producing and delivering our products. In addition, own-production expenses are also included in the cost of sales. However, these expenses represent only a very small portion of total cost of sales. In 2023, cost of sales was € 11,244 million, representing a decrease of 5% compared to the prior year level of € 11,867 million. This decline mainly reflects lower supply chain costs in line with the company’s revenue development.

Gross margin at 47.5%

In 2023, gross profit decreased 4% to € 10,184 million from € 10,644 million in 2022, while gross margin increased 0.2 percentage points to 47.5% (2022: 47.3%). The improvement was mainly driven by price increases, a more favorable business mix and lower freight costs. This was largely offset by significant negative currency effects and increased product costs. In addition, while improving throughout the year, elevated discounting levels weighed on the gross margin development in 2023.

Gross margin^1,2 in %

Royalty and commission income and other operating income decrease

In 2023, royalty and commission income decreased 26% to € 83 million (2022: € 112 million) due to a decline in royalty payments. Other operating income was down 59% to € 71 million from € 173 million in 2022, reflecting lower income from post-closing agreements with Authentic Brands Group related to the Reebok divestiture.

Other operating expenses as a percentage of sales up 1.4 percentage points

Other operating expenses, including depreciation and amortization, mainly consist of marketing and point-of-sale, distribution and selling, as well as general and administration expenses. In 2023, other operating expenses were down 2% to € 10,070 million (2022: € 10,260 million). As a percentage of sales, other operating expenses increased 1.4 percentage points to 47.0% from 45.6% in 2022. In 2023, marketing and point-of-sale expenses decreased 8% to € 2,528 million (2022: € 2,763 million). The company continued its marketing investments into brand campaigns, especially around important sports events such as the FIFA Women’s World Cup 2023. Furthermore, it broadened its portfolio of sports partners, such as the Indian cricket team and Les Mills in Training. In addition, adidas invested into the launch of new products such as the latest iterations of its iconic Predator, X, and Copa boots in Football; the introduction of the Adizero Adios Pro Evo 1 in Running; and drops with partners such as Bad Bunny, Pharrell Williams, or Edison Chen in Lifestyle. In Basketball, adidas successfully brought ‘Fear of God’ products and the first signature shoe with Anthony Edwards to market. The company limited point-of-sale expenses at times and in regions with heightened promotional activity in the marketplace. As a percentage of sales, marketing and point-of-sale expenses decreased 0.5 percentage points to 11.8% (2022: 12.3%). Distribution and selling expenses decreased 1% to € 5,547 million in 2023 from € 5,601 million in the prior year, mainly reflecting lower logistics costs. As a percentage of sales, distribution and selling expenses increased 1.0 percentage point to 25.9% from 24.9% in 2022. General and administration expenses were up 11% to € 1,839 million (2022: € 1,651 million), mainly due to higher personnel costs. As a percentage of sales, general and administration expenses were up 1.2 percentage points to 8.6% (2022: 7.3%). In total, operating overhead expenses increased 1% to € 7,541 million (2022: € 7,498 million). This includes one-off costs of around € 200 million related to the strategic review the company conducted in 2023, as well as donations and accruals for further donations in an amount of more than € 140 million. As a percentage of sales, operating overhead expenses increased 1.9 percentage points to 35.2% from 33.3% in 2022. SEE NOTE 30

Other operating expenses¹ in % of net sales

Marketing and point-of-sale expenses¹ in % of net sales

EBITDA decreases 28%

Earnings before interest, taxes, depreciation and amortization, as well as impairment losses/reversal of impairment losses on property, plant, and equipment; right-of-use; and intangible assets (EBITDA) decreased 28% to € 1,358 million in 2023 versus € 1,874 million in 2022. Total depreciation and amortization as well as impairment losses/reversal of impairment losses for tangible, right-of-use, and intangible assets decreased 15% to € 1,170 million in 2023 (2022: € 1,371 million).

EBITDA^1,2 € in millions

Operating margin decreases to 1.3%

Operating profit decreased 60% to € 268 million in 2023 versus € 669 million in 2022. This includes a negative impact of around € 100 million related to the significant devaluation of the Argentine Peso in the fourth quarter. The sale of remaining Yeezy product in the second and third quarter positively impacted adidas’ operating profit by an incremental amount of around € 300 million during 2023. At the same time, the company’s operating profit includes extraordinary expenses of more than € 340 million in total reflecting one-off costs related to the strategic review the company conducted in 2023 as well as donations and accruals for further donations. adidas’ operating profit also reflects a low-double-digit million euro amount of Yeezy-related inventory write-offs, reflecting the company’s decision to only write off a small portion of its remaining Yeezy inventory. The operating margin was 1.3% in 2023, 1.7 percentage points below the prior-year level (2022: 3.0%).

Operating profit¹ € in millions

Operating margin^1,2 in %

Net financial result decreases

Financial income increased 103% to € 79 million in 2023 (2022: € 39 million), mainly reflecting higher interest income and changes in the fair value of financial instruments. Financial expenses were down 12% to € 282 million compared to € 320 million in 2022, mainly due to lower net foreign exchange losses. As a result, the company recorded a net financial result of negative € 203 million, compared to negative € 281 million in 2022. SEE NOTE 32

Tax rate increases significantly

The company’s tax rate increased 154.7 percentage points to 189.2% in 2023 (2022: 34.5%). As a result of the significantly lower income before taxes, non-deductible expenses and tax-free income had a significant impact. In addition, the tax rate development reflected higher withholding tax expenses.  SEE NOTE 34

Net loss from continuing operations of € 58 million

While the operating business improved significantly in 2023, net loss from continuing operations was € 58 million (2022: net income of € 254 million), reflecting the extraordinarily high tax rate. Consequently, both basic and diluted earnings per share (EPS) from continuing operations reached negative € 0.67 (2022: € 1.25).

Net (loss)/income from continuing operations¹ € in millions

Basic earnings per share¹ in €

The total number of shares outstanding slightly increased to 178,549,084 at the end of 2023, reflecting the grant of 11,886 shares to Bjørn Gulden in connection with his Executive Board compensation during the first half of the year. The average number of shares used in the calculation of basic earnings per share (EPS) was 178,543,596 (2022: 183,263,629).

Gains from discontinued operations amount to € 44 million

In 2023, adidas incurred gains from discontinued operations of € 44 million, net of tax, related to the Reebok divestiture (2022: gain of € 384 million). SEE NOTE 03

Net loss attributable to shareholders of € 75 million

The company’s net loss attributable to shareholders, which, in addition to the net loss from continuing operations, includes gains from discontinued operations, amounted to € 75 million (2022: net income of € 612 million). As a result, both basic and diluted EPS from continuing and discontinued operations was negative € 0.42 versus € 3.34 in 2022.