Sports apparel brand adidas has reported that its revenues decreased by 3% to €10.61bn ($11.63bn) during the first half (H1) of fiscal year (FY) 2023.

This is a decrease from €10.89bn in the same period in FY22.

The company’s currency-neutral revenues for the period were also flat against the same period a year ago.

For the quarter ending 30 June, adidas saw its operating profit decline from €828m in H1 FY22 to €236m in H1 FY23.

Its net income from continuing operations also dropped significantly to €73m during the quarter from €671m in the same period a year ago.

The company’s gross margin fell 2.3 percentage points to 47.9% and its operating margin also dropped to 2.2% in H1 FY23.

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Its basic and diluted earnings per share (EPS) from continuing operations declined to €0.29 ($0.31) in H1 FY23 from €3.47 a year ago.

In Q2 of FY23, the company’s revenues declined 5% to €5.34bn while currency-neutral revenues were flat against the prior year’s figure.

Adidas said it benefitted from the first sale of some of its Yeezy inventory in Q2 FY23.

The company generated €400m from the initial product drop of Yeezy in June this year.

Direct-to-consumer (DTC) revenues rose by 16% in Q2 FY23, driven by a 14% and 19% growth across its e-commerce and retail stores businesses, respectively.

Regionally, currency-neutral sales in North America declined by 16%. EMEA was also down slightly 1% over the quarter.

Revenues grew 16% in Greater China and 7% in Asia-Pacific during the quarter.

The company’s gross margin increased 0.6 percentage points to 50.9% in Q2 FY23 while its operating profit was €176m.

The net income of adidas from continuing operations was €96m in Q2 FY23, down from €360m in Q2 FY22.

Its basic EPS from continuing operations also decreased to €0.48 over the period.

Adidas CEO Bjørn Gulden said: “We are happy with the way the second quarter developed. The core adidas business was slightly better than we expected. Although we still have too much slow-moving inventory in the market, sell-through has been improving. We also saw the gross margin in our core business improving strongly compared to the first quarter.

“The operating profit of €176m was substantially higher than our initial plans. The sale of the first part of the Yeezy inventory did, of course, help both our top and bottom line in the quarter.

“The market is still very volatile and we continue to see a lot of uncertainty for the rest of the year. As there is still a lot of inventory in the market, retailers are very cautious in their pre-orders.”

For the full year of 2023, adidas expects currency-neutral revenues to decline at a mid-single-digit rate. It also expects an operating loss of €450m.