Adidas Stock In Focus On Reported Layoffs: Retail's On The Sidelines

synopsis

Adidas shares were in the spotlight on Thursday on possible layoffs in Germany as the company focuses on its long-term plans and simplified operations even as the company forecasts a solid quarter, with retail sentiment lagging the stock price movement.

According to a Reuters report, Adidas may retrench up to 500 staff at its headquarters in Herzogenaurach, Germany.  The figure is estimated to be about 9% of the total staff it employs there, CNBC reported.

Adidas shares have increased 5% in value over the past five days after the footwear and sports apparel maker reported preliminary fourth-quarter earnings that exceeded analyst estimates. 

Analysts at Jeffries reportedly said the company’s preliminary results for the holiday quarter "reflect the combination of impressive brand heat and gross margin rebuild at a challenging time for some of its peers.” 

For Q4, Adidas revenues are estimated at EUR 6 billion ($6.25 billion) in the last three months of 2024, excluding currency fluctuations, leading several analyst firms including JPMorgan, Exane and Oddo to raise their price targets.

Sentiment on Stocktwits, however, was muted despite the company's recent strong performance and stock price movement.

Based on its preliminary unaudited numbers for the full year of 2024, the company’s currency-neutral revenues were up 12%, according to a company statement.

“To set adidas up for long-term success we are now starting to look at how we align our operating model with the reality of how we work. This may have an impact on the organizational structure and number of roles based at our HQ in Herzogenaurach,” an Adidas spokesperson told CNBC. 

The reported layoffs are an effort to adapt its business and are not part of a cost-cutting drive, according to the CNBC report.

Adidas shares have gained 50% over the past one year. 

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