Banc Sabadell| Adidas announced better preliminary 3Q23 results with LfL sales growth of +1% (-6.4% reported against -7.6% consensus) and EBIT of €409m (-27.5% against -53.5% consensus), thanks to a better gross margin evolution (c.+20 bps in 3Q23), Yeezy sales and a better-than-expected evolution of the rest of the businesses. All this allows them to raise again the 2023 guidance to a low single digit LfL decline in sales (as opposed to a mid-single digit decline before and against -4% BS(e) and flat consensus) and potential loss of -€100 M in EBIT (against +€100 M BS(e) and +€181 M consensus) in case of not disposing of the remaining Yeeze inventories (€300 M now versus €400 M before). In addition, they raise the 2023 EBIT target excluding all one-offs to ~.+€100m (vs previous operating break-even).
Assessment: We have a positive assessment of the 3Q23 performance, especially at the operational level, which is what has really allowed them to raise the guidance excluding all one-offs. In fact, although we do not have more details at the moment (full results will be published on November 8), the improvement in gross margin is particularly noteworthy, which basically points to a positive management of destocking and/or less need for promotional campaigns to sell it.
