Inventory was Up 24.9% in adidas’ 2023 Q1 Results

adidas (XETR: ADS.DE) announced its 2023 Q1 financial results on May 5, 2023. According to the announcement, net sales were down 0.5% (YoY, 3 months). In addition, gross profit and operating profit were down 10.8% and 86.3%, respectively. Moreover, net loss attributable to shareholders was -39 million EUR (3 months). In contrast, the company recorded net income attributable to shareholders of 490 million EUR in 2022 Q1.

Looking sales growth geographically, Latin America had the highest growth of up 42.6% (YoY, 3 months). It was followed by Asia Pacific of up 12.0%. North America showed the weakest performance of down 16.1%, followed by the Greater China of down 11.9%.

As sales decline, the amount of the company’s inventory is increasing. According to the announcement, the inventory was increased by 24.9% year-over-year. However, it was decreased by 5.0% quarter-over-quarter. Under these circumstances, the company’s balance of cash and cash equivalents has been decreasing. In 2023 Q1, long-term borrowings was up 19.5% year-over-year.

Adidas is currently taking several measures to reduce the amount of inventory. Thus, attention should be paid to whether the company’s financial condition improves.

adidas AG (XETR: ADS.DE)

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