Shares in Adidas (ADS) dropped 7.5% to €136 after the German sportswear giant’s FY26 guidance disappointed investors.
While the company’s turnaround under CEO Bjorn Gulden is gaining traction, this year’s profit outlook implies an operating margin of 8.5% to 8.8%.
That is lower than Adidas’ 10% medium-term target.
| Share price: €136 | PE: 13.9x |
| Market cap: €26bn | Yield: 2.9% |
The Gazelle and Samba sneaker maker also warned US tariffs and the weak dollar would have a €400 million impact on this year’s results.
On the right track
Adidas said it expects operating profits to increase to ‘around €2.3 billion’ this year, despite a rough €400 million negative impact from US tariffs and unfavourable currency swings.
That guidance was below the €2.7 billion consensus estimate.
The trainer titan’s FY25 results revealed a solid 5% rise in sales to a record €24.8 billion, driven by double-digit growth in all markets and channels. Operating profits grew 54% to €2.06 billion.
Double-digit growth
FY25 sales in North America, Adidas’ second-biggest market, grew 10% on a currency-adjusted basis but were down 1% in euro terms due to the weaker dollar.
Adidas’ Q4 operating profits more than doubled to €164 million on €6.1 billion of sales. This included near-20% growth via the direct-to-consumer (DTC) channel, reflecting continued strong consumer demand and sell-through rates for the brand’s products.
The company said it expects currency-adjusted sales to keep growing at a high-single-digit rate in 2027 and 2028.
€1 billion buyback
Gulden commented: ‘Driving double-digit growth in the fourth quarter despite all the external turbulence, and more than doubling our operating profit in the quarter made the year end very well and made 2025 much better than we had planned and expected when the year started.’
He added: ‘Our confidence in Adidas’ future top- and bottom-line growth and cash flow generation is also the reason why we now have decided to launch a share buyback. We will buy back shares for up to €1 billion this year.’
Adidas has extended Gulden’s contract to 2030, in a vote of confidence in his recovery strategy. Gulden took over at the start of 2023 with a brief to reboot Adidas after its break-up with rapper Ye over anti-semitic comments.
The crisis revealed how much the brand had come to rely on the since discontinued Yeezy sneaker line.
Adidas’ shares have halved in value over the past five years amid concerns over weak consumer spending, tariffs and competition from upstart rivals and a resurgent Nike (NKE).
We think this share price weakness presents a buying opportunity for patient investors. This summer’s football World Cup is set to boost demand for its footwear and apparel, while arch-rival Nike continues to struggle.
Keep in mind, Adidas delivered significant market share gains around the world in 2025. And a historically high gross margin of 51.6% underscores the strength of the brand.
Read the press release here: https://www.adidas-group.com/en/media/press-releases/adidas-reports-record-revenues-for-2025-and-expects-strong-sales-and-profit-growth-to-continue-over-the-next-years
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