adidas AG (PNK:ADDYY) Q1 2023 Earnings Call Transcript

Harm Ohlmeyer: Yes. And during on the €200 million, there’s no more detail that I can give you right now. But as I said previously, it will be a combination of potentially the one or the other retail store closure. We will also look at what we have built in the digital space. And as we know, without the Yeezy component and with a different trajectory in an e-commerce, we will look at some of the infrastructure that we have built there. Maybe the one or the other application or system need to be impaired, and we look at that overall structure. And of course, we will go through some selective rightsizing in the organization potentially here and there. But that’s something we haven’t decided yet. But also rest assured, we have not reported any onetime items in Q1 because it hasn’t been meaningful yet.

But probably going into Q2 and then more pronounced in the second half, and we are clear on how we want to move forward. Also going into ’24, we will be more transparent what’s in that €200 million bucket. That’s how we look at it.

Jurgen Kolb: Fantastic. All the best.

Operator: The next question comes from Thomas Chauvet from Citi Research.

Thomas Chauvet: The first one on lifestyle on Samba, Gazelle and Campus, Terrace shoes. You said, Bjorn, how quickly demand went from 100,000 to millions of pair, are all the lifestyle products that could experience the same kind of upside to your maybe internal forecast, initial forecast? You mentioned Fear of God. Anything else? And for Terrace, will you be willing to test some price increases once you lap the huge initial success especially if you keep supply low? And secondly, on Russia, there was a detailed article in Russian newspaper earlier this week about a potential agreement to sell the stores to a partner a bit, I guess, like what Inditex did recently. It was in Russian so I had to translate that. It wasn’t so clear.

Could you comment on that? Or on your, more broadly, your options in Russia? Would you want to follow that route or to contemplate a return to Russia? And if you could remind us what the size of the business was in 2019 — sorry, in 2020 — sorry, ’21. Just before the — well, yes, probably in 2020, ’19 before COVID and before Ukraine and the wind down of the business?

Bjorn Gulden: I mean on the — what should I say, scaling of the product. If you think about our archive, we have many shoes that we can scale. And again, I think the good thing is that there is an energy being created right now which wasn’t there a year ago, and it’s now up to us to manage it properly. And it started with what we call Terrace with Samba, Gazelle and Spezial. Now there’s another court-shoe, Campus, coming, and we start to see some movement also on the Superstar. All this being court-based and of course, the danger is that we need to manage this properly so we don’t destroy any of them. So they need some discipline, but I think they’re all scalable. What we desperately need in the next 18 months is also to find silhouettes on the running lifestyle.