Adidas is updating its guidance for the year after reporting better-than-expected preliminary results for the first quarter of 2024.

According to the German athletic company, currency-neutral revenues increased 8 percent compared to the prior year level. In euro terms, the company’s revenues grew 4 percent to 5.458 billion euros in the first quarter, versus 5.274 billion euros at the same time last year. The company’s operating profit reached 336 million euros in Q1, up from 60 million euros the prior year.

As a result, Adidas now expects currency-neutral revenues to increase at a mid- to high-single-digit rate in 2024. This is up from its previous guidance of an increase at a mid-single-digits. Plus, the company’s operating profit is now expected to reach a level of around 700 million euros, up from the previously forecast of 500 million euros.

In the first quarter, Adidas said that it continued to shed its existing Yeezy stock, with the latest drop generating revenues of around 150 million euros and an operating profit of around 50 million euros in the period.

In its guidance, the company added that it assumes the sale of the remaining Yeezy inventory during the remainder of the year to occur on average at cost. “This would result in additional sales of around 200 million euros and no further profit contribution during the remainder of the year,” Adidas stated.

And while the company did report better-than-expected preliminary results and raised its guidance, Adidas is still cautious about the future. “The company continues to expect unfavorable currency effects to weigh significantly on the company’s profitability this year,” the firm said. “These effects are projected to continue to negatively impact both reported revenues and the gross margin development in 2024.”

This update comes one day after Morgan Stanley analysts said in a note that Adidas could stand to benefit from Nike’s slowdown in the innovation department.

“We see scope for Adidas to opportunistically benefit from the current lull in Nike’s product innovation, as well as benefiting from a more rational pricing approach as Nike looks set to return to more of a scarcity model with key franchise products,” read the note from analysts, including Edouard Aubin and Grace Smalley.

When it comes to Adidas, Morgan Stanley analysts noted “broad-based positive sentiment” around the brand’s product line-up in basketball, football and even in the competitive running category.

“With CEO Bjørn Gulden now in the seat for nearly 18 months, our checks point to improved positive sentiment across both Adidas’ performance and lifestyle product, supported by improved marketing and wholesale service levels, as well as an increasingly favourable market backdrop,” read the note. “We expect this combination to drive a meaningful top-line inflection from [the second half of 2024 and] onwards. We see this building top-line momentum as powerful, and now more than offsetting risks to the story.”