adidas (XETR: ADS.DE) announced its 2022 Q4 financial results on March 8, 2023. According to the announcement, net sales was up 1.3% (3 months, YoY). On the other hand, gross profit was down 19.2%. In 2022 Q4, adidas recorded operating loss and net loss of 724 million EUR and 513 million EUR, respectively (3 months). In Q4 2021, the company reported operating profit and net income of 66 million EUR and 213 million EUR, respectively.
adidas recorded net cash used in operating activities as cash outflow of 543 million EUR (TTM). In 2021, the company had recorded net cash generated from operating activities of 3,192 million EUR. Please note that increased inventories contributed significantly to the outflow of operating cash flow. Furthermore, adidas recorded negative free cash flow of -48 million EUR. It was inflow of 2,777 million EUR in 2021.
Let’s look at recent sales trends by region. Latin America recorded the highest growth of up 47.2% (3 months, YoY). This was followed by Asia Pacific of up 16.2%. On the other hand, quarterly sales in Greater China was down 49.7%.
adidas continues to suffer from supply chain constraints. In addition, the company’s business performance has deteriorated sharply due to challenging market environment and significant inventory take-backs in Greater China, one of the major markets.
We believe that the supply chain constraints are expected to continue in the future. Thus, one of the challenges would be whether adidas can adapt to such a market environment and streamline the company’s business.
- Watanabe & Brothers’ Investment is holding shares of adidas AG.
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