From the Sector

• Currency-neutral revenues flat versus the prior-year level
• Top-line development reflects improved sell-out trends and conservative sell-in strategy
• Gross margin up 0.6pp to 50.9%; strong improvement compared to Q1 reflecting better sell-through and less discounting
• Operating profit of € 176 million includes extraordinary expenses of around € 160 million related to one-off costs, donations and accruals for future donations
• Inventory position improves substantially versus Q1 level to € 5.5 billion; now up only 1% year-over-year

In the second quarter of 2023, currency-neutral revenues were flat versus the prior-year level. The top-line development continued to be impacted by the company’s conservative sell-in approach in order to reduce high inventory levels, particularly in North America and Greater China. At the same time, adidas second quarter revenues benefited from the first sale of some of its Yeezy inventory. The initial product drop in June generated revenues of around € 400 million in Q2, which is largely in line with the Yeezy sales generated in the prior year’s quarter.

Footwear revenues grew 1% during the quarter, reflecting strong growth in football, basketball, tennis and US sports. Apparel sales declined 3% in the second quarter. As the apparel market continues to be particularly overstocked, the company continued its conservative sell-in strategy to improve sell-through and margins in the medium term. Accessories grew 8% during the quarter driven by growth in football.  

Lifestyle revenues were down during the quarter despite extraordinary demand for the company’s Samba, Gazelle and Campus franchises. While adidas slowly started to scale its offering for these product families during the second quarter, the total volume still only represents a small portion of the company’s overall business. Sales in the adidas Performance categories continued to show positive momentum. This reflects strong demand for new product introductions such as the latest iterations of its Predator, X and Copa football boots, as well as jerseys for both the FIFA Women’s World Cup 2023 and the company’s unique portfolio of football teams ahead of the start of the European club season. In addition, the Adizero product family in running continued to gain a lot of attention around marathon races across the world, translating into higher demand. At the same time, the brand’s Barricade tennis franchise grew strongly, leveraging the excitement around major tournaments.

In euro terms, the company’s revenues declined 5% to € 5.343 billion in the second quarter (2022: € 5.596 billion).

Stronger sell-out trends and conservative sell-in
As a result of the company’s initiatives to reduce high inventory levels, currency-neutral sales in wholesale declined 10% despite double-digit growth in Greater China and Latin America. At the same time, direct-to-consumer (DTC) revenues grew 16% versus the prior year. This development was driven by strong growth in both the company’s e-commerce business (+14%) as well as own retail stores (+19%), reflecting continued strong sell-out trends across most regions. The outperformance of the company’s DTC channel versus the wholesale business was also related to the first sale of the Yeezy inventory, which was done exclusively through adidas’ own e-commerce channel.

Double-digit growth in Greater China and Latin America
Currency-neutral sales in North America declined 16% during the quarter. The region is particularly affected by elevated inventory levels in the market and – in response to this – the company’s significantly reduced sell-in. Revenues in Greater China grew 16% in Q2, reflecting double-digit sell-out growth in both wholesale and own retail. Sales in EMEA were down slightly (-1%) despite double-digit DTC growth. While the company’s initiatives to reduce inventory levels and discounting weighed on the overall top-line development in the region, adidas recorded significantly improving full-price trends during the quarter. Revenues in Asia-Pacific increased 7% during the quarter, driven by strong double-digit growth in DTC. Latin America continued to increase at a double-digit rate (+30%), reflecting strong growth in both wholesale and DTC.

Gross margin improves to 50.9%
The company’s second quarter gross margin increased 0.6 percentage points to 50.9% (2022: 50.3%). This improvement was mainly driven by price increases the company has implemented as well as by an improved channel mix. At the same time, higher supply chain costs and unfavorable currency movements continued to strongly weigh on the gross margin development. While still adversely impacting the company’s gross margin in the quarter, discounting levels significantly improved compared to the first quarter of the year.  

Operating profit of € 176 million, resulting in an operating margin of 3.3%
Other operating expenses were up 3% to € 2.582 billion (2022: € 2.501 billion). As a percentage of sales, other operating expenses increased 3.6 percentage points to 48.3% (2022: 44.7%). Marketing and point-of-sale expenses decreased 7% to € 617 million (2022: € 663 million). As a percentage of sales, marketing and point-of-sale expenses slightly decreased by 0.3 percentage points to 11.5% (2022: 11.8%). Operating overhead expenses were up 7% to € 1.965 billion (2022: € 1.838 billion), reflecting higher logistics expenses. In addition, the company recorded one-off costs of around € 50 million related to the strategic review the company is currently conducting as well as donations and accruals for further donations in an amount of around € 110 million. As a percentage of sales, operating overhead expenses increased 3.9 percentage points to 36.8% (2022: 32.8%). The company’s operating profit amounted to € 176 million (2022: € 392 million) in the quarter. This amount includes the extraordinary expenses of in total around € 160 million reflecting the one-off costs related to the strategic review as well as the donations and accruals for further donations. The sale of the Yeezy product positively impacted adidas’ operating profit by an incremental amount of around € 150 million in Q2. The operating margin reached 3.3% in the quarter (2022: 7.0%).

Net income from continuing operations of € 96 million
After taxes, the company’s net income from continuing operations amounted to € 96 million (2022: € 360 million), while basic EPS from continuing operations decreased to € 0.48 (2022: € 1.88).

Outlook

adidas expects revenues to decline at a mid-single-digit rate
On July 24, adidas had adjusted its full year financial guidance to reflect the positive impact of the first sale of some of its Yeezy inventory and a slightly better-than-expected development of the adidas business in the first half of the year. At the same time, macroeconomic challenges and geopolitical tensions persist. Elevated recession risks in North America and Europe as well as uncertainty around the recovery in Greater China continue to exist. In addition, the company’s revenue development will continue to be impacted by the initiatives to significantly reduce high inventory levels. As a result, adidas now expects currency-neutral revenues to decline at a mid-single-digit rate in 2023 (previously: decline at a high-single-digit rate).

Underlying operating profit anticipated to be around the break-even level
The company’s underlying operating profit – excluding any one-offs related to Yeezy and the ongoing strategic review – is still anticipated to be around the break-even level. Including the positive impact from the first Yeezy drop of around € 150 million, the potential write-off of the remaining Yeezy inventory of now € 400 million (previously: € 500 million) and one-off costs related to the strategic review of up to € 200 million (unchanged), the company now expects to report an operating loss of € 450 million in 2023 (previously: loss of € 700 million).

On August 2, the company launched a second drop of Yeezy inventory. Throughout the month of August, adidas is making a range of existing products available through both its own e-commerce channel as well as the digital platforms of selected wholesale partners. If successful, this second drop would further improve the company’s results. However, as the results of this drop are yet unknown, it is not accounted for in the company’s current top- and bottom-line outlook for 2023.

The KARL MAYER GROUP is intensifying its business activities in Turkey and is setting up a subsidiary in Bursa. The opening of the new site is planned for October 2023.

The company's success on the market to date has been made possible to a large extent by its close and long-standing cooperation with Erko, the KARL MAYER GROUP's regional representative. The two companies have been cooperating for more than 50 years and see further positive market development in Turkey in the medium to long term.

In order to exploit and shape the potential, they will sharpen the focus of their competences in the Warp Knitting and Warp Preparation Business Units: Erko A.S. will focus on sales, taking advantage of its long-standing regional network. The KARL MAYER GROUP will take over the after-sales service and offer customers a link to the Care Solutions world of the group. Customers benefit from next-level support with many innovative solutions, especially digital ones, for meeting the challenges of our time. At the same time, they can continue to build on the tried and trusted.

The headquarters in Bursa covers just under 1,000 m² on three levels. It offers space for service, an academy with textile samples and a training machine, a workshop for minor repairs and a warehouse for the spare parts business. Located in the top-selling region in Turkey, it is also designed as a contact point for customers.

Thanks to its strong position on the Turkish market, the KARL MAYER GROUP intends to support the companies here, most of which are family-run, in the forthcoming generational changes, and to provide the next generation with specialist support and qualifications.

Dibella already announced a year ago that there would be a change of managing director in the middle of this year. As of 01.08.2023, Carsten Ridder will fill the position of additional managing director together with Stefan Tenbusch. At the same time, the previous managing director Ralf Hellmann will take on an advisory role in the company.

Carsten Ridder is no stranger to the company and has many years of experience as a committed member of the management. In 2001, the banker and graduate in business administration first joined the sister company Bimeco, before moving to Dibella in 2017 as an authorised signatory and member of the management. During this time, the active shareholder has contributed significantly to the development and implementation of important strategies in the areas of human resources and finance, among others.

Ralf Hellmann will continue to play an important role in the company after his retirement from the management by supporting Dibella in an advisory capacity. His experience and knowledge will remain a valuable resource to ensure the success of the projects already initiated as well as new ones.

Riri, which became part of Oerlikon Group on March 1, presents its FW 24-25 collection, which embraces plastic and metal trends.

Metal Trends: GALACTIC SHINE, TEXTURIZED BLACK and AMBER GLAZE
As a result of joining the Oerlikon Group, specializing in surface engineering, polymer processing, and additive manufacturing, Riri is accelerating its transition to new processes related to surface treatments, particularly the PVD (Physical Vapour Deposition) technology, a physical process that significantly reduces impacts on the environment. PVD processes can be appreciated particularly on sliders and buttons where gold and shiny black finishes stand out. Silver textures, science fiction-inspired surfaces and shapes, and glossy, brushed finishes in shades of gray and very light gold: GALACTIC SHINE brings to earth a sidereal experience, witness from a journey where the atmosphere becomes rarefied and elegance takes shape among metalized leather tapes, gold PVD pullers, organic cotton, and gleaming inox. Black also shines in the TEXTURIZED BLACK selection, in tone-on-tone contrasts that create plays of light and shadow, thanks to metallic effects, glossy black PVD treatments, tapes and galvanic in shades of black. The atmosphere becomes warmer by varying on amber tones, the absolute protagonists of the AMBER GLAZE mood, which offers a different interpretation of elegance through bright amber tones, rose gold, diamond prints and geometric patterns.

Plastic Trends: GHOSTLY ICE and SPRAY VANISHED
GHOSTLY ICE features accessories that refer to the skiing theme, offering an algid beauty made up of transparent surfaces and icy effects, a theme in which the sustainability of mono-materials coexists with the elegance of the end result. The color inspirations are totally different, but sustainability and elegance remain unchanged in the SPRAY VANISHED zipper selection, in which vibrant multicolored effects communicate joy and vitality through iridescent PVD effects and the use of recycled materials, such as the polyamide of the patented B.Lock button.

Three strong women, each different from the other, but who have managed to leave their mark on the history and evolution of the female role, and despite living in different eras, have left an indelible mark on society: Madame De Pompadour, nicknamed Reinette, the favourite of King Louis XV, Luisa Amman, called Corè by the great poet Gabriele D'Annunzio, and the iconic Vivienne Westwood, Miss Viv.
The three women are the FOREVER ICONS chosen and celebrated Iluna, where each woman becomes the protagonist of a “traveling exhibition” that will accompany Iluna between events and fairs.

Reinette
The nickname "Reinette" belonged to Madame De Pompadour, the favourite of King Louis XV. She had a significant influence in politics, arts, and fashion, shaping the style of the first half of the 18th century. Beauty and grace are represented in a floral theme, featuring small romantic details that become opulent with the use of lurex and golden cords. The color palette is soft, muted, and powderyry.

Corè
Luisa Amman, born in the late 19th century into a wealthy bourgeois family, married at a young age and became Marchesa Casati. "Corè" is the endearing nickname given to her by her lover Gabriele D'Annunzio, inspired by Kore, the Queen of the Underworld. She was a patron of the arts, an eccentric and transgressive collector. This theme celebrates opulence, from peacock feathers to Liberty-style designs in deep colours and warm metallic glimmers. An innovative proposal for the theme is the pleating technique, achieved directly in the weaving process of the Ultralight jacquardtronic laces.

Miss Viv
Vivienne Westwood, an extraordinary protagonist with an intense and irreverent life. Her insights have forever marked fashion and transformed the general standards of dressing. Rock and rebellious, she drew inspiration from street trends, anticipating avant-garde movements. In the 1990s, she brought back Tartan, mixing it with sensual roses in a maximalism that went against the prevailing trends, featuring vibrant colours. At the beginning of the third millennium, she grasped the importance of preserving the planet and left us with a motto that is more urgent and relevant than ever: "Buy Less, Choose Well, Make it Last." Within this theme, there is a new GRS-certified print that saves water, applied to ultra-fine Lurex nets, which are also certified.

In the printing industry, direct-to-film technology is having a transformative impact on the apparel decoration space. It provides a simple and affordable garment printing process that facilitates vibrant, dynamic, full-colour designs with a durable print. It opens up opportunities for digital print service providers (PSPs) to expand their product offerings in the textile industry, their network of potential customers and expand the range of fabrics they can print on.

Direct-to-film vs. Screen Printing
Direct-to-film printing is the process of digitally printing directly onto a special transfer film sheet. The printed film is subsequently sprinkled with a hot-melt powder and heated. Once the transfer sheet is cured and dried, it can be heat-pressed onto a variety of fabrics to create premium transferred designs for customised merchandising, sportswear, and an array of other promotional applications for the textile market. Compared with traditional screen printing, the plate creation required for that process is far too time-consuming. Not only this, but it does not match direct-to-film’s ability to produce vivid colours and quality details such as shapes, lettering, and motifs often sought after in the promotional and merchandising space for bespoke textiles.

The Mimaki TxF150-75
Mimaki’s first direct-to-film inkjet printer is the TxF150-75, a fitting extension to the 150 series, with a maximum printing width of 80cm. Offering a stable printing plotter, the model’s built-in ink circulation system and degassed ink pack are resolutions to common direct-to-film challenges such as poor ink ejection and white ink clogging. The new printer also includes core Mimaki features including NCU (Nozzle Check Unit) and NRS (Nozzle Recovery System) for stable, uninterrupted print production. Operating in harmony with the textile printer itself is Mimaki’s ECO PASSPORT by OEKO-TEX® certified water-based pigment textile inks, formulated especially for the TxF150-75. Coupled with Mimaki’s RasterLink7 RIP software, users are offered end-to-end oversight and efficiency from creative design to final product.

In addition, and in line with Mimaki’s collaborative approach to meeting customer needs, Adkins has developed an 80cm wide powder shaker cure unit to complete this ‘A brand’ direct-to-film printing solution. By offering the printer and post-processing unit at 80cm wide, customers can print larger garments with less waste and quicker production times, making the process much more cost effective.

As a leading company in the collecting, sorting, reselling, and recycling of post-consumer textile waste, TEXAID has enabled the recycling of post-consumer textile waste into new textiles and clothing. Working together with brands and retailers, TEXAID and their partners are continuing to take action to shift from a linear to a circular system.

Today’s linear system of «take – make – waste» needs to change. New textiles are produced used and discarded instead of putting them to a second use. The production of new textiles requires natural resources that are limited, and the current system has a significant negative impact on our planet. The transition to a circular system, where garments are kept in use for longer, is an opportunity to harness untapped potential around customer loyalty, economic growth, and ecological sustainability. To move away from the linear system and enable products to be made out of post-consumer textile waste, TEXAID continues to expand its offering for in-store collection programs throughout Europe and the USA

Aligned with the launch of the PUMA Switzerland 23/24 Women’s World Cup home jersey, PUMA and TEXAID have partnered for the Swiss division of their RE:FIBRE Program. PUMA is working to have a more sustainable, long-term solution for recycling polyester jerseys. To achieve this goal, they have developed their RE:FIBRE Program, which transforms textile waste, along with other used materials, into new textiles.

To enable this textile to textile program in Switzerland, specific feedstocks are requires, which is TEXAID’s role as the operator of the collection and sorting. Newly launched in the PUMA Zurich location at Jelmoli, customers can bring garments of all brands and deposit them in-store. TEXAID collects and sorts all deposited items, sending eligible polyester garments into the PUMA RE:FIBRE program, to be recycled into new garments. All other garments are channeled by TEXAID to their next life cycle.

Baldwin Technology Co. Inc. has launched a new set of resources for sheet-fed and web offset printers at PrintEnomics.com with the release of the “Video Didn't Kill the Radio Star. And Digital Didn't Kill Print” eBook.

Its PrintEnomic$ website offers curated resources that analyze trends and issues impacting not only sheet-fed and web offset printers but also narrow web and corrugated printers. Separate eBooks, videos, podcasts and instructional guides are available to help maximize printer profitability in all three specialized areas.

Baldwin is a leading global manufacturer and supplier of innovative process-automation equipment, parts, service and consumables for the printing, packaging, textile, plastic film extrusion and corrugated industries.

More than 5,000 print industry professionals have already downloaded or viewed earlier-released eBooks centered on narrow web (“Untangling the Web”) and corrugated (“From Beast to Beauty”).

Through interviews with customers, industry insiders, in-house engineers – and reviews of the latest reporting – Baldwin explores four trends in the “Video Didn't Kill the Radio Star. And Digital Didn't Kill Print” eBook:

• The resurgence in book publishing
• Labor challenges
• Direct mail marketing as a cure for screen fatigue
• Sustainability

adidas unveils its new campaign to celebrate the FIFA Women’s World Cup Australia & New Zealand 2023™. The campaign is dedicated to next gen icons Alessia Russo, Lena Oberdorf and Mary Fowler and looks to drive more global attention for the game and inspire other young women and girls to follow in their footsteps.

Marking adidas’ most impactful Women’s World Cup campaign to date, the brand unites its global family of football legends and advocates of the women’s game. Headlined by a series of fast-paced films, the campaign welcomes a star-studded line up of David Beckham, Leon Goretzka and Ian Wright, actor and football fan, Jenna Ortega, as well as Argentina’s World Cup hero, Lionel Messi. They come together to celebrate the skills that Russo, Oberdorf and Fowler are renowned for, from vision and interception to power, creativity and accuracy.

The films are part of a new creative proposition from adidas for the upcoming tournament. ‘Play Until They Can’t Look Away’ aims to platform and showcase some of the world’s greatest football players on the biggest stage – whose skills and passion for the game demand global attention and support.

Set against the soundtrack of SL2’s iconic song, On a Ragga Tip, fans see World Cup winner, Lionel Messi, alongside Mary Fowler, guiding both viewers and Jenna Ortega across the world to Fowler’s home country of Australia , with preparations for the biggest women's sporting moment underway.

Meanwhile, David Beckham and Ian Wright, alongside his granddaughter, Women’s Arsenal FC player, Raphaella Wright-Phillips, are unable to look away in a supermarket as Russo spectacularly weaves her way through the narrow aisles, in her own creative fashion. Finally, Goretzka is expertly interrupted while bowling as Oberdorf whizzes around an arcade, powerfully intercepting balls in each scene to achieve a high score of her own.

Paying respect to those who have gone before, the films are also filled with subtle references to memorable moments that football super fans will revel in, including shirt numbers, iconic tournament balls, plus much more.

Archroma has won several major accolades at the Just Style 2023 Excellence Awards:

• Business Expansion – Digital Platform award: Color Atlas online library
• Innovation – Dyes award:
  o FiberColors®
  o Diresul® Evolution Black liq
  o NOVACRON® Atlantic EC-NC

Digital Platform Award for The Color Atlas by Archroma®
The Color Atlas by Archroma® empowers fashion designers and stylists with off-the-shelf color inspiration and the ability to quickly and reliably execute their design intent with products that meet their desired sustainability profile and comply with international eco-standards.

Innovation Awards for Dyeing Technologies
Archroma was also recognized for its innovation in dye technology with three Just Style Excellence Awards.

Archroma’s FiberColors® technology was awarded for helping move the industry towards a circular economy. Synthesized with a minimum 50% textile waste based raw material, FiberColors® transforms pre- and post-industrial fashion and textile waste into gorgeous upcycled colors – allowing brands to color their new collections with their pre-loved collections.

Diresul® Evolution Black liq, based on the company’s latest synthesis technology, has advantages over traditional sulfur black including large reductions in the amount of water needed in dye synthesis and a unique shade and wash-down effect when compared with existing black denim.

Novacron® Atlantic EC-NC won its Just Style Excellence Award for addressing mill challenges with the industry’s first blue element to deliver chlorine- and nitrogen oxide (NOx)-fastness alongside lightfastness. Based on a patented dye molecule, it offers a trouble-free way to produce more sustainable cotton casual wear and home textiles that look as good as new for longer.