Adidas earnings: German sportswear giant Adidas reported its first annual loss in over three decades in 2023. The loss, attributed to a tumultuous split with rapper Kanye West, marks a key moment for CEO Bjorn Gulden as he endeavours to steer the brand back to profitability.

Following the termination of its partnership with West in October 2022, which led to the suspension of sales of the lucrative Yeezy sneaker line, Gulden embarked on a strategy to revive Adidas' fortunes. In his inaugural year as CEO, he focused on clearing remaining Yeezy stock while revitalising popular offerings like the Samba and Gazelle shoes and nurturing better relationships with retailers. This approach has paid dividends, with Adidas shares staging recovery and outperforming rivals Nike and Puma under Gulden's leadership.

Despite the challenging circumstances, Gulden remains cautiously optimistic, noting that 2023 ended better than initially anticipated. Looking ahead, Adidas expects its core business, excluding Yeezy, to show improvement in 2024, with projected double-digit growth in the latter half of the year.

Despite the net loss of 58 million euros, the company's first since 1992, Adidas has announced that its board will propose an unchanged dividend of 0.70 euros ($0.7650) per share based on its 2023 performance. However, this decision is expected to result in a 2 per cent decline in Adidas shares at the market open.

Adidas foresees a decline in sales in North America due to market oversaturation, but it anticipates significant growth in other regions. The company remains confident in its ability to regain market share from competitors like Nike, leveraging the popularity of products such as the Samba and Gazelle sneakers.

Despite the setback, Adidas has shown resilience in the face of challenges, with footwear sales registering an 8 per cent increase in the fourth quarter. However, apparel sales experienced a decline of 13 per cent.

Observers, such as portfolio manager Thomas Joekel from Union Investment, acknowledge the positive trajectory of Adidas under Gulden's leadership, noting a rise in brand appeal and reduced reliance on discounts.

Looking forward, Adidas aims to manage expectations for its remaining Yeezy inventory, selling the products "at least at cost." While demand for Yeezy shoes may not match previous levels, the company remains focused on capitalizing on emerging trends and sustaining its upward momentum in the market.

(With Reuters inputs)