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CONSUMER CYCLICALS: Adidas (A3 Neg/A- Neg) FY guidance upgraded - again

CONSUMER CYCLICALS
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A moment to look back at Adidas; in March FY EBIT guidance was €500m it's now at €1.2b (+140%). Granted some of that has been on its unrealistic assumption of at-cost selling down on Yeezy inventory (another €50m profit from it in 3Q) but still it is clocking impressive growth and profitability (ex. Yeezy sales +14%, gross margins +200bps in Q3).

Equities are +150% since Adidas dropped Kanye in late 2022. Bonds showed surprisingly resilience through it (lack of free-float may have helped). Raters are overdue now on stabilising ratings, curve is still far from showing any value.

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A moment to look back at Adidas; in March FY EBIT guidance was €500m it's now at €1.2b (+140%). Granted some of that has been on its unrealistic assumption of at-cost selling down on Yeezy inventory (another €50m profit from it in 3Q) but still it is clocking impressive growth and profitability (ex. Yeezy sales +14%, gross margins +200bps in Q3).

Equities are +150% since Adidas dropped Kanye in late 2022. Bonds showed surprisingly resilience through it (lack of free-float may have helped). Raters are overdue now on stabilising ratings, curve is still far from showing any value.