TLDR
- Adidas projected 2026 operating profit of €2.3 billion, falling short of the €2.72 billion analyst estimate
- U.S. tariffs and currency challenges are expected to create a €400 million drag on performance
- Shares declined approximately 7–8% in Frankfurt following the guidance release
- 2025 results were impressive — operating profit jumped 54% to €2.06 billion with record revenue of €24.8 billion
- Bjorn Gulden’s CEO tenure was extended through 2030, while the company announced a 40% dividend hike to €2.80 per share
Adidas posted impressive 2025 numbers, but the market’s focus has shifted to what lies ahead — and the picture isn’t as rosy.
The German athletic apparel giant announced full-year revenue of €24.8 billion, representing roughly 5% growth, while net income surged 75% to reach €1.34 billion. Operating profit increased 54% to €2.06 billion, significantly exceeding the company’s initial guidance range of €1.7–1.8 billion set at the beginning of the year.
On a currency-neutral basis, revenue expanded 13%, with robust double-digit performance spanning all geographic markets and distribution channels. The company’s gross margin improved by 0.8 percentage points, reaching 51.6%.
Fourth-quarter performance was equally impressive. Currency-neutral sales expanded 11% to €6.1 billion, with the direct-to-consumer segment posting double-digit increases across every region. Gross margin widened by 1 percentage point to 50.8%, while operating profit more than doubled, hitting €164 million.
So what triggered the 7–8% stock decline?
The culprit is forward-looking guidance. Adidas projected 2026 operating profit at approximately €2.3 billion — significantly below the €2.72 billion Visible Alpha analyst consensus. RBC Capital Markets analyst Piral Dadhania characterized this as suggesting a 15% consensus earnings reduction “at face value.”
Tariffs and Currency Create Headwinds
The sportswear manufacturer identified a combined €400 million challenge stemming from U.S. tariff policies and adverse currency fluctuations. With substantial production based in Asian nations now facing U.S. import duties, Adidas finds itself more vulnerable than certain competitors. Additionally, euro strength against the dollar has diminished the value of international earnings.
Deutsche Bank characterized the operating income and margin guidance as “slightly weaker-than-expected.”
The anticipated operating margin for 2026 — approximately 8.5–8.8% — would fall below Adidas’s own 10% medium-term objective, RBC analysts noted.
Regarding revenue, Adidas forecasts currency-neutral growth in the high-single-digit percentage range for 2026, translating to roughly €2 billion in additional sales. North America and Greater China are projected to be the primary growth engines, each expected to deliver low-double-digit percentage increases.
Mid-Term Outlook Offers Some Comfort
Adidas also unveiled a longer-term strategy, projecting high-single-digit revenue expansion and a mid-teens operating profit compound annual growth rate (CAGR) spanning 2026–2028.
Morgan Stanley observed that such extended guidance is “relatively rare” and suggested it serves to “soften the blow” of the near-term shortfall. With shares trading at approximately 13x 2026 earnings when results were announced, the investment bank expressed a more positive view of the comprehensive outlook.
The company also put forward a 40% dividend enhancement to €2.80 per share — signaling management’s confidence in cash flow generation despite immediate challenges.
CEO Bjorn Gulden received a contract extension running through 2030. RBC described this as “reassuring,” highlighting his extensive knowledge of the sporting goods industry. Gulden, who assumed leadership in 2023 after the company’s controversial Ye partnership ended, has repeatedly exceeded his initial annual guidance.
Adidas also revealed intentions to name Nassef Sawiris as chairman.
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