adidas(US:ADDYY)2023-03-08 18:36Financial Data and Key Metrics Changes - The company reported a net sales growth of 1% in currency-neutral terms, with a gross margin decline of 3.4 percentage points to 47.3% and an operating margin down to 3% [13][20] - Net income from continuing operations was approximately €254 million, reflecting significant one-off costs of €350 million [20][21] - The company originally planned for double-digit growth and margins, which were not achieved due to various challenges [13][20] Business Line Data and Key Metrics Changes - Performance categories grew by 19%, with football seeing significant growth, particularly during the FIFA World Cup [15] - Lifestyle and sportswear categories faced disappointing performance, with a need for improvement in commercial offerings [17][49] - The wholesale channel grew by 1%, while direct-to-consumer (D2C) sales increased by 2%, and e-commerce grew by 4% [18] Market Data and Key Metrics Changes - Europe saw a 9% growth, while North America experienced a 12% increase, and Latin America also reported double-digit growth [14] - Greater China faced a significant decline of 36%, impacting overall profitability [14] - The company noted strong growth in outdoor, football, and running categories across various regions, despite challenges in lifestyle segments [15][54] Company Strategy and Development Direction - The company aims to focus on performance categories and improve its lifestyle offerings, with plans to enhance storytelling and marketing strategies [11][17] - There is a commitment to sustainability and gender equality, with campaigns like "Run for the Oceans" and "I'mPossible" [11][42] - The company plans to leverage its historical roots in sports and expand its presence in smaller sports and fashion collaborations [36][44] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in 2022, including the war in Ukraine, COVID-19 restrictions, and the termination of the Yeezy partnership [12][54] - There are positive signals emerging from the Chinese market, with a return to sports participation and increased consumer spending [54][55] - The company is optimistic about future growth, particularly in performance categories and emerging markets [53][62] Other Important Information - The company proposed a dividend of €0.70 per share, representing a payout ratio of 49.2% of net income [29] - The company is focused on reducing excess inventory and improving its financial position, with a goal to return to a leverage ratio below 2 by 2024 [28] Q&A Session Summary Question: What are the expectations for growth in the coming years? - The company aims to achieve a return to double-digit growth and improve margins, focusing on performance categories and addressing lifestyle segment challenges [13][44] Question: How is the company addressing inventory issues? - The company is reducing buying volumes and repurposing existing inventory to better align with market demand [25][26] Question: What is the outlook for the Greater China market? - Management sees positive signs in Greater China, with increased consumer engagement in sports and performance products [54][55]