Key Takeaways:
Adidas reported record second-quarter sales of €6.74 billion, beating estimates, as World Cup demand drove 14 percent currency-neutral revenue growth.
"The strong sell-through across all markets reflects the exceptional consumer demand for our products," the company said in its earnings statement, citing its most successful marketing campaign in brand history with more than 9 billion views.
Revenue of €6.74 billion topped the €6.63 billion analyst consensus compiled by the company, while operating profit of €574 million missed the €623 million estimate as marketing spending surged 30 percent to €924 million. Gross margin improved 0.8 percentage point to 52.5 percent, helped by full-price sales and a favorable channel mix. Net income from continuing operations rose 6 percent to €398 million, or €2.10 per share.
The company raised its full-year currency-neutral revenue growth forecast to between 9 percent and 10 percent, from a prior outlook for high-single-digit growth. It maintained its operating profit target of about €2.3 billion. Adidas also said it received a small refund of previously paid US tariffs and may recover an additional $250 million to $300 million, though that is not reflected in guidance.
Performance revenue rose 39 percent, led by Football and Running, while Lifestyle grew 2 percent. Apparel surged 35 percent, while footwear rose just 1 percent as the company kept a disciplined sell-in approach in a promotional marketplace. DTC sales jumped 25 percent, with e-commerce up 27 percent and own retail up 23 percent. Wholesale grew 6 percent as Adidas managed sell-in conservatively, particularly in Europe.
By region, Greater China led with 15 percent currency-neutral growth, followed by North America at 17 percent, Latin America at 28 percent, and Japan/South Korea at 18 percent. Europe grew 6 percent.
In a separate announcement, Adidas said Birgit Kretschmer will succeed Harm Ohlmeyer as chief financial officer at year-end. Ohlmeyer, who has been with the company for almost 30 years and served as CFO since May 2017, chose not to extend his mandate.
The guidance raise signals management expects brand momentum to continue through the second half, driven by a strong product pipeline and improved retailer relationships. Investors will watch whether operating margins can expand as marketing spend normalizes after the World Cup.
This article is for informational purposes only and does not constitute investment advice.
