Footwear Insight - Business Report Quarterly

Sales: Currency-neutral sales rose 11% in Q2 to the equivalent of $5.41 billion with growth in all global regions except for North America and Japan. Wholesale revenues jumped 17% to the equivalent of $3.17 billion as direct-to-consumer sales rose by 4 percent to €2.39 billion with own retail up 15% but ecommerce down 6%. But senior executives are content with the improving global sentiment for the brand, stronger sell through rates, and a year-over-year sales increase for its apparel segment. Footwear sales improved by 15% to $3.31 billion that included a double-digit increase for lifestyle products. Reported North American sales slipped 7 percent to $1.21 billion. Operating Profit: Improved by 97% year-over-year to €346 million ($321.4 million). But North American operating profit tumbled by 7% year-over-year to €1,302 million ($1.21 billion) as the geography's quarterly gross margin declined 320 basis points year-over- year to 43.2%. Gross margin: Fell by 10 basis points year-over-year to 50.8% due to impact from sell-off of Yeezy products. Excluding Yeezy, the quarterly gross margin rose by 150 basis points due to better sell- through rates, less discounting, and lower freight and product costs. Key developments: Remains steadfast to its commitment to be a double-digit growing company with a 50% to 52% gross margin in 2026. Achieving those two metrics will enable Adidas to reach an Ebit of 10%. Sales: +18.0% in H1 ended June 30, to ¥342,199 million ($2.43 billion). Global performance running sales increased 15.6% to ¥170,903 million ($1.21 billion). North America had essentially flat operating profit at ¥6,714 million ($47.7 million) despite year-over-year sales growth of 21.1% to ¥67,748 million ($481.0 million). Operating profit: +75.5% to ¥58,966 million ($418.9 million). Gross margin: +450 basis points to 55.5% from 51.0% in the year-ago period. Key developments: Now expected to reach its mid-term FY26 objectives this FY, its 75th anniversary as a brand. Current outlook for this FY calls for 75% operating profit growth A deeper dive into 18 public companies in the footwear business, including Brazil's Grendene and Vulcabras (which are not featured here) and manufacturer Yue Yuen, shows that aggregate industry sales rose by 3.0 percent in Q3 for the group to more than $33.2 billion. Only Allbirds, Grendene, and Wolverine Worldwide suffered year-on-year sales declines. On the profitability side, the aggregate segment gain for the group was up 57 percent. Four companies – Puma SE, Skechers, Vulcabras, and Wolverine reported lower year-over-year profits. Meanwhile, one-third of the 18 footwear-related, public companies achieved a triple-digit, year-over-year percentage gain in profitability – Adidas Group, Alpargatas, Fila Holdings, Grupo SBF, On Holdings, and Yue Yuen.e group's Return on Sales (RoS) for Q3 was 3.7 percent versus 2.4 percent in Q3/23. 10 Footwear Insight Business Report Quarterly ~ Q3 October 7 2024 footwearinsight.com BRAND & RETAIL SCORECARD Q3 QUARTER 3 ENDING 9/23/24

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