Dive Brief:
- Adidas sold the last of its Yeezy inventory in the fourth quarter, the company said in a Wednesday earnings release. The merchandise generated 650 million euros ($705 million) in revenue and 200 million euros in profits in 2024. It ends a yearslong saga that started when Adidas cut ties with Ye, formerly known as Kanye West, in 2022.
- CEO Bjørn Gulden on a call with analysts also confirmed that the company is eliminating up to 500 “obsolete” roles at its headquarters in a push to operate more locally. The retailer has initiated a voluntary leave program, but will cut the rest of the jobs if enough employees do not take that offer.
- The company’s financial results aligned with its preliminary announcement last month, with full-year revenue growing 11% to 23.7 billion euros and Q4 revenue surging 24% to about 6 billion euros. Adidas swung into the black as well, reporting net income from continuing operations reached 824 million euros in 2024.
Dive Insight:
After a solid growth year, Adidas is looking ahead to more growth — and a new operating model — in 2025. And it plans to do that without any additional Yeezy sales.
According to CFO Harm Ohlmeyer, there is “not one Yeezy shoe left in our inventory.” The specter of Yeezy will linger a while longer, though, as the company expects lower revenue growth this year, in part to make up for the lack of sales from that merchandise. Still, the activewear giant expects high-single-digit revenue growth in 2025, and sees opportunities to pick up market share while Nike works through its challenges.
“You’re all aware that the big competitor is struggling,” Gulden said on the call. “And you’re also aware that the world is very volatile — and a volatile world where the biggest one is struggling is of course an advantage for someone who wants to change their model.”
Gulden pitched the retailer’s job cuts as an opportunity to reduce complexity and reset during a time of relative strength. The goal with the new operating model is to give individual markets more responsibility for their own commercial success and trust leaders in those regions to make decisions that are best for their markets.
“We of course have to build a frame for the brand,” Gulden said of leadership in Herzogenaurach, Germany. But the headquarters is “not going to decide what shoes we’re going to sell in a city on the other side of the world.”
Gulden said there could be changes in other parts of the world, but that a review of the company’s operating model revealed that many of the company’s hindrances originated from its headquarters. The solution to performing better and reducing complexity, according to Gulden, is to have strong local leadership.
“You don’t need rules for everything when you trust people,” Gulden said, adding that bureaucracy is holding the company back from doing business. The 500 job cuts are a key to becoming more streamlined, he later added. “You don’t win the popularity prize when you do that, right — and you shouldn’t. But it is necessary.”
The focus on competing locally is also key to Adidas’ strategy in the U.S., where it is building up creative centers in Portland and Los Angeles to tackle the market from a more U.S. perspective.
“We don’t need to be No. 1 in America because that’s an illusion — the competitors are so much stronger — but we can definitely grow and become much, much stronger in the U.S. than we have historically been,” Gulden said.