In Euro terms, the brand’s revenues fell by 1% to €5.3 billion in the period. Adidas noted that its performance was impacted by significantly reduced sell-in to the wholesale channel as part of the company’s initiatives to reduce high inventory levels.

Meanwhile, the discontinuation of the Yeezy business represented a “drag” of around €400m million on revenues, primarily in North America, China and EMEA.

Despite these results, Adidas noted that footwear revenues were up by 1% in the quarter, driven by Performance categories. However, apparel sales dropped by 3% in the period while accessories were up by 8%. Despite “extraordinary” demand, lifestyle revenues were also down in the first quarter.

By channel, Adidas saw wholesale currency-neutral sales grow by 3%, driven by growth in EMEA, Asia-Pacific and Latin America. Direct-to-consumer (DTC) revenues were down by 7% year-on-year including a drop of 23% in e-commerce, primarily affected by Yeezy. Sales in the company’s own retail stores were up by 11%.

Currency-neutral sales in North America were down by 20% in the quarter, particularly affected by Yeezy, while Greater China saw a decline of 9%. In EMEA, sales grew 4% and revenues in Asia-Pacific and Latin America had the strongest growth at 16% and 49% respectively.

Adidas highlighted that its gross margin was down 5.1 percentage points to 44.8%, driven by an increase in supply chain costs as well as higher discounting in the marketplace. Operating profit for the period was €60 million with a margin of 1.1%. Ultimately, the company had a net loss from continuing operations of €24 million.

For the full 2023 fiscal year, Adidas expects currency-neutral revenues to decline at a high-single-digit rate as macroeconomic challenges and geopolitical tensions persist.

CEO Bjørn Gulden said: “Q1 ended a little better than we had expected with flattish sales and a small operating profit of €60 million. Sales growth excluding Yeezy was 9%. Great double-digit growth in Latin America and Asia-Pacific, and slight growth in EMEA despite Russia were in line with our plan. Total revenues in Greater China were still down 9%, but we achieved double-digit sell-out growth.

“This was better than expected and makes us optimistic for the rest of the year. The 20% sales decline in North America – down 5% excluding Yeezy – was in line with our conservative sell-in strategy due to the high levels of inventory and discounts in the market.”