Adidas UK Online Sales Plunge Despite Retail Growth

Adidas Online Sales: Key Insights 

• Sales Decline in 2023: Adidas UK faced a 9% drop in sales last year, with notable decreases in wholesale and eCommerce revenue, ultimately causing an 18% decline in profit before tax.

• Positive Outlook for 2024: Looking ahead, Adidas is confident about 2024, anticipating heightened consumer interest and a boost from major sports events, prompting an upgraded global profit forecast to €1 billion (US$1.1 billion).

Adidas UK has reported a 9% decline in sales for 2023, with total revenue falling to £1.12 billion (US$1.47 billion). 

The drop was driven by an £88 million (US$115 million) fall in wholesale sales and a £37.7 million (US$49.4 million) decrease in eCommerce revenue, while retail sales rose by £14.9 million (US$19.6 million), reaching £106.4 million (US$139.4 million). However, this growth in physical store sales was not enough to offset the broader declines. 

Declining Profits and Margins 

The company also reported an 18% drop in profit before tax, down to £30.8 million (US$40.4 million). Its gross profit margin slipped from 24% to 19%, while the operating profit margin held steady at 3%.

Net profit fell to £22 million (US$28.8 million), down from £31 million (US$40.61 million) the previous year. 

Positive Outlook Despite Challenges 

Despite challenges posed by inflation, interest rate hikes, and geopolitical tensions, Adidas remains optimistic about 2024, citing strong consumer interest driven by the "Terrace trend" in lifestyle products and the expected boost from major sports events like the Olympics and Euros.

Globally, Adidas has upgraded its operating profit forecast to around €1 billion (US$1.1 billion), up from an earlier estimate of €700 million (US$770 million).

Adidas Online Sales: Closing Thoughts 

The current retail climate reflects a shifting consumer focus, with brands like Adidas navigating post-pandemic challenges and recalibrating their strategies. While Adidas faces hurdles, including its first loss in decades, its efforts to realign, especially in the U.S. market, show promise. 

Looking forward, as both resale platforms and major brands adapt to economic shifts and consumer trends, the eCommerce market's growth and innovation are likely to remain strong.

Sources: FashionNetwork, Reuters, ECDB