Adidas: Yeezy Exit to Hurt Q1 Performance

German sports brand Adidas (GB:0OLD)(ADDYY) will report its Q1 financial result on May 5. However, ongoing challenges, including its exit from the Yeezy partnership (the company terminated its relationship with rapper Kanye West), weakness in China, and macro challenges, could continue to hurt its financials. 

Analysts expect Adidas to post revenues of €5.01 billion in Q1, reflecting a decline from €5.3 billion in the prior-year quarter. 

While Adidas’ top line will likely remain under pressure, the company could report a loss due to lower sales and pressure on margins due to increased supply chain costs and higher promotional activity. 

Analysts expect Adidas to post a loss of €0.55 a share, reflecting a sharp decline from the comparable prior-year period.    

On April 17, Goldman Sachs analyst Richard Edwards reiterated his Hold recommendation on Adidas stock. Edwards expects Adidas’ Q1 sales to decline by 4.7% (on a constant currency basis). The analyst expects most of its sales to decrease in North America due to Yeezy’s exit. 

As Adidas is battling weak sales, the company focuses on sports, primarily in the U.S., to reaccelerate growth. The company plans to double down on things around sports that are particularly U.S.-centric, the Wall Street Journal reported, citing the company’s North America President, Rupert Campbell. 

While Adidas focuses on bolstering its U.S. business, let’s check what analysts recommend about its stock ahead of the Q1 print. 

What’s the Prediction for Adidas Stock?

Analysts are sidelined on Adidas stock due to the ongoing macro and company-centric issues discussed earlier in this article. Its stock has received five Buy, 11 Hold, and four Sell recommendations, translating into a Hold consensus rating. 

Meanwhile, analysts’ average price target of €150.55 shows a downside potential of 5.28%. 

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