Adidas shares jump after 2023 guidance raise

LONDON (Reuters) -Shares in Adidas (OTC:) gained 4% at the open on Wednesday after the sportswear company raised its guidance for the year in a surprise third-quarter results pre-release.

Adidas said it now expects a loss of 100 million euros ($106 million) this year versus a previously expected loss of 450 million and a loss of 700 million euros it warned of in February.

It is the second time this year Adidas has raised forecasts ahead of results – expected on Nov. 8 – as sales of its remaining stock of Yeezy shoes helped boost revenue.

Shares in Adidas are now up around 40% this year as investors gain confidence in CEO Bjorn Gulden’s ability to turn the company around after it ended the lucrative Yeezy partnership with rapper Ye, formerly known as Kanye West, over his antisemitic comments.

“When Bjorn Gulden took over in January he effectively kitchen-sinked guidance, and I believe they were already building in very cautious guidance for Europe, U.S., and China, so there is still scope for Adidas to positively surprise particularly with this hot product cycle,” said Graham Renwick, analyst at Berenberg.

Adidas has increased its production of the Samba and other “terrace” styles as it seeks to fuel a trend for the rubber-soled sneakers originally popular in the 1970s.

The German sportswear giant now sees currency-neutral revenues declining at a low-single-digit rate instead of a mid-single-digit rate in 2023, and underlying operating profit excluding the Yeezy sales should reach 100 million euros for the year, up from a break-even level.