Adidas' (ETR:ADS) Earnings: A Springboard for Further Growth

Adidas' (ETR:ADS) recent earnings report for Q3 2024 has sparked optimism among investors, with the company reporting a 10% increase in currency-neutral revenues and a 46% increase in operating profit. This strong performance, driven by double-digit growth in both Lifestyle and Performance segments, suggests that Adidas is well-positioned for continued growth. As an investment-focused perspective, this article will explore the potential of Adidas' earnings as a starting point for further growth and discuss income-focused investment options that align with the author's core values.

Adidas' earnings growth has been robust despite currency headwinds, with the underlying adidas brand growing 14% in Q3 2024. The company's focus on Lifestyle and Performance segments has paid off, with double-digit growth in both areas. This balanced growth has contributed to a 2.0 percentage point increase in gross margin to 51.3% and a significant improvement in operating profit. The strong brand momentum and product mix have driven growth, with popular retro footwear models and collaborations like Adidas Originals by Wales Bonner fueling demand.


Adidas' earnings growth has been supported by strong performance in various regions, despite a 7% decline in North American sales due to the smaller Yeezy business. Excluding Yeezy, North American revenues increased, indicating a strong underlying performance. Europe, Japan/South Korea, Greater China, Emerging Markets, and Latin America all showed currency-neutral growth, demonstrating the company's ability to adapt to local preferences and expand its consumer base.


As Adidas continues to grow, investors may consider income-focused investment options that align with the author's core values. The Cohen & Steers Quality Income Realty Fund (RQI) offers stable yields and potential for capital gains, making it an attractive option for those seeking consistent, inflation-protected income. Additionally, the XAI Octagon Floating Rate & Alternative Income Trust (XFLT) and REITs like AWP and GOOD provide diversification and adaptability in investment strategies. For those seeking reliable income-generating investments, Scotiabank offers high dividends and strong institutional stability.

Adidas' earnings growth is a testament to the company's ability to adapt and innovate in the face of market challenges. As the company continues to focus on Lifestyle and Performance segments, investors can expect further growth and potential opportunities for income-focused investments. By capitalizing on undervaluations created by market perceptions and diversifying investment portfolios, investors can secure steady returns and achieve their long-term financial goals.