Annual Report 2023


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Management Assessment of Performance, Risks and Opportunities, and Outlook

Assessment of performance versus targets

We communicate our financial targets on an annual basis. We also provide updates throughout the year as appropriate. In the transition year 2023, adidas made operational and financial progress and performed significantly better than initially expected. The overall business environment continued to be characterized by geopolitical tensions, macroeconomic challenges, and high inventory levels. As a result of our decisive actions, we were able to significantly reduce inventory levels during the year. Our successful initiatives included limiting the sell-in to the wholesale channel, which negatively impacted our top-line development. At the same time, the underlying business performed above our expectations. In addition, the company also benefited from the sale of parts of the remaining Yeezy inventory. Consequently, we were able to upgrade our guidance twice in the course of the year. Ultimately, our 2023 financial results significantly exceeded our latest guidance from October on both the top and bottom line. SEE ECONOMIC AND SECTOR DEVELOPMENT

Company targets versus actual key metrics





Initial targets


Updated targets


Latest targets





Currency-neutral net sales development




to decline at a high-single-digit rate


to decline at a mid-single-digit rate


to decline at a low-single-digit rate




to increase at a mid-single-digit rate

Operating margin/ operating profit/loss




operating loss of € 700 million


operating loss of € 450 million


operating loss of € 100 million


operating profit of € 268 million


operating profit of around € 500 million

Average operating working capital in % of net sales




to reach a level of between 25% and 26%


to reach a level of between 25% and 26%


to reach a level of between 25% and 26%




to reach a level of between 23% and 24%

Capital expenditure4


€ 695 million


to reach a level of around € 600 million


to reach a level of around € 600 million


to reach a level of around € 600 million


€ 504 million


to reach a level of around € 600 million


As published on February 9, 2023. For average working capital and capital expenditure as of March 8, 2023.


As published on July 24, 2023.


As published on October 17, 2023.


Excluding acquisitions and leases.

In 2023, revenues were flat on a currency-neutral basis. This was significantly better than our initial expectations (February 2023: high-single-digit decline) and also ahead of our latest guidance (October 2023: low-single-digit decline). The development reflects strong double-digit growth in Latin America. Revenues in both Greater China and Asia-Pacific grew at high-single-digit rates. 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. The discontinuation of the Yeezy business represented a drag of around € 500 million on the year-over-year comparison during 2023. The sale of parts of the remaining Yeezy product positively impacted net sales in the amount of around € 750 million. This compares to a total of more than € 1,200 million of Yeezy revenues in 2022.

Our operating profit reached € 268 million in 2023, ahead of our latest guidance, provided in October, of an operating loss of € 100 million. Compared to our initial guidance provided at the beginning of 2023 (operating loss of € 700 million), the reported operating profit of € 268 million is around € 1,000 million higher than initially expected. This outperformance was partly driven by a better operational business. In addition, the company’s decision to only write off a small portion of its remaining Yeezy inventory and sell a significant part of it in 2023 also drove the better-than-expected operating profit development last year. SEE INCOME STATEMENT

Average operating working capital as a percentage of sales ended the year 2023 at 25.7%. This was in line with the guided level of between 25% and 26% and represents a year-over-year increase of 1.6 percentage points. This reflects the slight increase in average operating working capital against the backdrop of lower net sales in 2023 compared to 2022. Capital expenditure decreased 27% to € 504 million in 2023, below our guidance of a level of around € 600 million. More than 75% of these investments were spent on controlled space initiatives and IT activities. Controlled space initiatives comprise investments in new or remodeled own retail or franchise stores as well as shop-in-shop presentations of our products in our customers’ stores. SEE STATEMENT OF FINANCIAL POSITION AND STATEMENT OF CASH FLOWS

Beyond our financial performance, we also actively monitor other KPIs. These other KPIs include, among others, our sustainable article offering and the share of women in management positions. In 2023, with almost eight out of ten of our articles being sustainable, meaning that they are – to a significant degree – made with environmentally preferred materials, we exceeded the planned annual milestone for 2023. With 40% female representation in management positions in 2023, we decided to establish a new goal and committed to achieving a level of 50% by 2033 (previously: to increase to more than 40% by 2025). SEE INTERNAL MANAGEMENT SYSTEM

Assessment of overall risks and opportunities

Our Risk Management team aggregates all risks and opportunities identified through the half-yearly risk and opportunity assessment process to determine the company’s risk and opportunity portfolio (i.e., the company’s aggregated risk position). Results from this process are analyzed and reported to the Executive Board accordingly. The Executive Board discusses and assesses risks and opportunities on a regular basis and takes into account the relationship between the risk and opportunity portfolio (i.e., the company’s aggregated risk position) and risk appetite as well as risk capacity in its decision-making. Compared to the prior year, our assessment of certain risks and opportunities has changed in terms of likelihood of occurrence and/or potential financial impact. Our risk and opportunity aggregation using a Monte Carlo simulation determined that the company’s aggregated risk position does not exceed the company’s risk capacity threshold with a likelihood of at least 99%. Therefore, we do not foresee any material jeopardy to the viability of the company as a going concern. SEE RISK AND OPPORTUNITY REPORT

Assessment of financial outlook

In 2024, we expect macroeconomic challenges and geopolitical tensions to persist. This may negatively affect consumer sentiment and discretionary spending power. In North America, we will continue our initiatives to reduce high inventory levels, which will weigh on our sales and profitability during the first half of the year. In addition, unfavorable currency effects are projected to adversely impact both reported revenues and the gross margin development in 2024. The assumed sale of the remaining Yeezy inventory at cost with no operating profit contribution is also expected to weigh on the company’s operational and financial performance versus the prior year. At the same time, the global sporting goods industry is set to benefit from major sports events in 2024.

Against this backdrop, we plan to return to top-line growth by scaling successful franchises, introducing new ones, and leveraging our significantly better, broader, and deeper product range. Improved retailer relationships, more impactful marketing initiatives, and our activities around the major sports events will also contribute to the sales increase. As a result, we expect currency-neutral sales to grow at a mid-single-digit rate in 2024. Our operating profit is currently expected to reach a level of around € 500 million in 2024. While we will continue to increase our marketing and sales investments, the top-line growth and an improving gross margin are projected to drive the bottom-line development in 2024. SEE OUTLOOK

We believe our outlook for 2024 realistically describes the underlying development of the company. However, the outlook for 2024 as outlined in this report is subject to change. Ongoing uncertainties regarding macroeconomic challenges, the impact from geopolitical conflicts, and the development of consumer sentiment as well as potential supply-chain disruptions represent risks to the achievement of our stated financial goals and aspirations. No other material event between the end of 2023 and the publication of this report has altered our view. SEE OUTLOOK

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Controlled space
Includes own-retail business, mono-branded franchise stores, shop-in-shops, joint ventures with retail partners and co-branded stores. Controlled space offers a high level of brand control and ensures optimal product offering and presentation according to brand requirements.
This Group Management Report is a combined management report. It contains the Group Management Report of the adidas Group and the Management Report of adidas AG.
The Declaration on Corporate Governance is part of the Annual Report.
Declaration on Corporate Governance