By Linda Pasquini
(Reuters) -Shares in Adidas (OTC:ADDYY) rose more than 8% on Wednesday, hitting their highest level in over two years after the German sportswear giant on Tuesday reported quarterly results above expectations and hiked its 2024 guidance on strong demand for its sneakers.
Growth is being driven by strong demand momentum in "terrace" retro styles, such as Samba, Gazelle and Campus, as well as strength in performance categories, analysts at Wedbush said.
Analyst Cedric Lecasble at Stifel also highlighted that the raise in 2024 guidance "had little to do with Yeezy mechanics, but was much more driven by Adidas brand building materializing at full speed."
In a turnaround led by CEO Bjorn Gulden, Adidas has resumed the sales of its Yeezy line after a bruising break-up with rapper West, who goes by Ye, to clear remaining stock while seeking to boost its popular retro styles.
Lecasble described revenue performance in the first quarter as "impressive", with analysts at Telsey Advisory Group adding that growth excluding sales of Yeezy products also speaks to higher full price selling with lower promotional activity year-on-year.
All regions were likely positive, including North America, they added.
In the region, Wedbush sees Adidas likely benefiting from channel inventory improvement as brand heat accelerates.
Analysts however viewed Adidas' guidance for operating profit (EBIT) of 700 million euros as still conservative.
"The market clearly does not believe the EBIT guide, which to us appears to be unrealistic, and overly conservative," RBC analyst Piral Dadhania said, noting that consensus estimates already sit at around 890 million euros for 2024.
Quarterly EBIT was 336 million euros.
The company said it sold another 150 million euros worth of Yeezy products in the past quarter, for an operating profit of around 50 million euros. It however expects no further profits from the sale of the remaining Yeezy inventory, which it anticipated at about 200 million euros.
Shares were up 8.2% by 1107 GMT, topping the pan-European STOXX 600 index.