Adidas Raises Revenue and Profit Expectations After a Surprisingly Good First Quarter, Significantly Influenced by Sales of the Controversial Yeezy Collection. The Herzogenaurach-Based Company Announced on Tuesday That It Now Expects Operating Income of About 700 Million Euros for the Full Year, Compared to the Previous Forecast of 500 Million Euros.

After the termination of the contract with Yeezy's namesake, Kanye West, last year, Adidas decided to sell off the inventory instead of writing it off. The release of Yeezy apparel contributed approximately 150 million euros to sales and about 50 million euros to operating income in the first quarter. The remaining inventory is to be sold at cost price, which contributes to revenue but not to profit.

The first quarter showed a 4% increase in sales for Adidas to 5.46 billion euros, which is above the 3.1% consensus by Visible Alpha. The gross margin improved to 51% compared to 45% in the previous year, while operating profit jumped to 336 million euros from 60 million euros.

For the entire year, Adidas now expects currency-adjusted sales growth in the mid to high single-digit range, compared to the previous expectation of mid single-digit growth. Despite the positive results, the company continues to anticipate that currency effects will weigh on profitability, revenue, and gross margin this year.