Adidas defied expectations with a robust first quarter in 2024, boasting an 8 per cent increase in currency-neutral revenue compared to the same period last year. This translates to a euro figure of €5.458 billion, a 4 per cent year-over-year rise. The company's financial performance wasn't just driven by sales; gross margin also saw a significant improvement, jumping 6.4 percentage points to a healthy 51.2 per cent.

This positive momentum extends to profitability. Operating profit for Q1 reached €336 million, a substantial increase from the €60 million reported in the first quarter of 2023. This impressive performance has prompted adidas to revise its full-year guidance upwards. 

The company now anticipates currency-neutral revenue growth to land in the mid-to-high single-digit range for 2024, exceeding their previous mid-single-digit forecast. Additionally, operating profit is now expected to reach around €700 million, significantly higher than the previously projected €500 million.

The Yeezy brand continued to be a bright spot for Adidas. The latest Yeezy drop generated a significant €150 million in revenue and a cool €50 million in operating profit during Q1. However, future Yeezy sales are expected to play a more neutral role. Adidas anticipates selling the remaining Yeezy inventory throughout the year at cost price, resulting in an additional €200 million in sales but no further profit contribution.

Looking ahead, a potential headwind exists in the form of currency fluctuations. Adidas acknowledges that unfavorable currency effects are likely to continue impacting profitability throughout 2024. These effects are projected to negatively affect both reported revenue and gross margin.

Despite this challenge, Adidas' strong Q1 performance and revised guidance paint a picture of a company exceeding expectations and navigating the year with cautious optimism.