Adidas shatters records, but profit margin reveals a complicated picture
Adidas delivered a stunning second-quarter performance, smashing sales records and fueling optimism about the fiscal year ahead – but a closer look at the financials reveals a more nuanced story.
€6.7 Billion boom, but costs bite
The sportswear giant reported revenues up a remarkable 15% year-on-year, hitting €6.7 billion on a constant currency basis. That’s a significant jump, particularly in the second half with revenues climbing 14% to €13.3 billion. It’s a testament to the brand’s current momentum, bolstered spectacularly by the World Cup.
However, the celebratory tone quickly dampened when examining operating profit. The number landed at €574 million, significantly below analyst expectations of €623 million. The culprit? A massive investment in marketing – specifically, €212 million dedicated to the brand’s global push, headlined by campaigns featuring Timothée Chalamet, Messi, and Bad Bunny.
Growth fueled by world cup hype
Despite the profit shortfall, revenue forecasts have been revised upwards. Adidas now anticipates growth of 9-10% for fiscal 2026, a substantial increase from their previous projections. The operating profit outlook remains steady, projected at approximately €2.3 billion. CEO Bjørn Gulden acknowledged the situation, stating that the brand’s strength and product appeal were undeniable, attributing much of the success to a ‘fantastic job’ by their international teams.
Regional highlights: europe and north america lead the charge
Digging deeper, the numbers paint a clear picture of regional strength. Apparel revenues surged 35%, fueled by double-digit growth in the Football and Originals categories. The World Cup’s influence was undeniably a catalyst, with increased product availability prioritized to meet consumer demand – a strategic move that prioritized sales volume over immediate inventory optimization.
Europe saw a 6% revenue increase to €2.1 billion, while North America experienced a robust 17% jump to €1.5 billion. Greater China and Japan/South Korea also contributed significantly, with growth rates of 15% and 18% respectively. Notably, Latin America and emerging markets delivered exceptional performance, with increases of 28% and 12% respectively.
A ceo’s perspective
“Being the CEO of Adidas during a World Cup is even better,” Gulden quipped, clearly enjoying the success. “We didn’t script this performance; it’s a genuine reflection of the brand’s power and the dedication of our people.” He also announced the appointment of Birgit Kretschmer as CFO, effective September 1st, citing the company's strong performance as justification for the confidence in continued momentum. It’s a story of impressive growth, tempered by strategic investment and a reminder that even the most dominant brands face challenges in maintaining profitability.