Adidas hikes 2024 earnings guidance after second-quarter beat

German sportswear maker Adidas is increasing its full-year earnings guidance after a better than expected second quarter, it said on Tuesday, in its second upgrade this year.

The success of the company’s low-rise multi-coloured Samba and Gazelle sneakers, along with weaker sales at rival Nike had been expected to help Adidas to deliver strong second-quarter sales.

Operating profit for 2024 is now forecast at about 1 billion euros ($1.1 billion), up from previous guidance of around 700 million euros and double its expectations earlier this year, Adidas said.

Chief Executive Bjorn Gulden, in the job since the start of 2023, has been driving a turnaround at the company bruised by its break-up with rapper Ye, formerly known as Kanye West, which left Adidas with unsold Yeezy shoes worth 1.2 billion euros.

The profit upgrade comes after Adidas said its second-quarter sales rose 9% from a year earlier to 5.82 billion euros.

That was ahead of analysts’ average forecast of 5.58 billion euros, according to LSEG data.

Adidas said its gross margin was 50.8% in the quarter, below last year’s 50.9% and analyst expectations for 51.4%, damped by the reduced Yeezy business from 2023 levels.

Adidas and rivals such as Puma and Nike are betting on a boost in demand for products such as running shoes this summer, with the Olympic Games due to start in Paris later this month. They are sponsoring Olympic athletes and national teams.