adidas(US:ADDYY)2023-11-09 03:09Financial Data and Key Metrics Changes - The company reported €6 billion in net sales for Q3 2023, with a gross profit margin of 49.3% and an operating profit of €409 million [62][63] - Inventory levels decreased by 23% year-over-year, now at €4.8 billion, with a significant reduction from €6.3 billion in Q3 2022 [69][71] - The company expects a low single-digit decline in net sales for the full year, an improvement from previous guidance of a mid-single-digit decline [73][74] Business Line Data and Key Metrics Changes - Footwear sales grew by 6%, while apparel sales declined by 6% due to high inventory levels [39] - The direct-to-consumer (D2C) business is split 37% D2C and 63% wholesale, with brick-and-mortar retail up 10% [37][36] - The wholesale business saw a decline of 2%, attributed to a weak order book at the start of the quarter [35] Market Data and Key Metrics Changes - North America experienced a 9% decline in sales for the quarter, with a 15% decline year-to-date [13] - Greater China reported a 6% increase for the quarter and a 3% increase year-to-date, showing recovery from earlier declines [25] - Latin America saw a 13% increase for the quarter and a 29% increase year-to-date, although growth slowed due to political and economic uncertainties [31] Company Strategy and Development Direction - The company is focusing on improving relationships with retail partners and enhancing the order book for H1 2024 [82] - A new office in Los Angeles aims to strengthen connections with American street culture and basketball [16] - The company plans to invest in various sports, including basketball and running, to build credibility and market presence in China [28] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing challenges in the U.S. market but expressed optimism about improving inventory levels and sell-through rates [12][15] - The company is committed to building a strong foundation for 2024 and beyond, prioritizing long-term growth over short-term gains [79] - Management emphasized the importance of innovation and brand heat, with a pipeline of new products set to launch soon [77] Other Important Information - The company has decided not to launch any new Yeezy products in Q4 2023, focusing instead on evaluating future strategies for the Yeezy inventory [61] - The company is actively engaging in collaborations and partnerships to enhance brand visibility and appeal to younger consumers [57][58] Q&A Session All Questions and Answers Question: What is driving the deceleration in your performance for Q4? - Management indicated that Q4 guidance reflects a conservative approach to avoid overextending the pipeline, focusing on laying a foundation for better performance in 2024 [84] Question: Are you seeing retailers change and have more appetite for higher preorders in H1 or H2 2024? - Management confirmed an increase in retailer interest and expects a much higher order book for the second half of 2024, indicating a positive shift in retailer relationships [82]