adidas ETR: ADS reported record quarterly sales in the second quarter of 2026, citing strong demand through its direct-to-consumer channels, World Cup-related apparel sales and continued momentum in performance categories. The company raised its full-year sales growth outlook while maintaining its operating-profit forecast.
Currency-neutral revenue increased 14% in the quarter to €6.7 billion, the highest nominal quarterly sales total in the company’s history, Chief Executive Officer Bjørn Gulden said. First-half revenue reached €13.3 billion, also a record, with currency-neutral growth of 14%.
Operating profit for the second quarter rose 5% to €574 million, despite an additional €212 million in marketing spending related largely to the World Cup. First-half operating profit totaled €1.28 billion, representing a 9.6% operating margin, according to Chief Financial Officer Harm Ohlmeyer.
Guidance Raised for Sales, Maintained for Profit
The company lifted its 2026 currency-neutral revenue growth guidance to 9% to 10%, from a previous expectation of high-single-digit growth. adidas maintained its operating-profit target of about €2.3 billion.
Gulden said the updated outlook implies roughly 6% revenue growth in the second half based on current results. Wholesale orders are trending at about 6% to 7%, he said, while direct-to-consumer performance could provide upside but is more difficult to forecast.
The company’s operating-profit guidance does not include potential future tariff refunds, Gulden said. Ohlmeyer said adidas had recognized a small U.S. tariff refund in the second quarter and expects an additional $250 million to $300 million could be received in the second half, though it has not been booked.
Management also reiterated its expectation of adding €2 billion in annual revenue in both 2027 and 2028, with the goal of reaching a double-digit operating margin.
World Cup Drives Apparel and Direct Sales
Gulden said adidas sold nearly 18 million jerseys connected to the World Cup, with Mexico leading demand, followed by Argentina. Sales of World Cup merchandise began in the fourth quarter of the prior year and continued through the first and second quarters, he said, adding that sales were still continuing in Spain following its tournament win.
The company spent heavily on marketing and local activations during the event, including more than a quarter-million visitors at its New York soccer activation, according to Gulden. He said the company’s “Backyard Legends” campaign generated strong engagement and was nominated for an Emmy.
While the World Cup expanded sales and brand visibility, management emphasized that the event also displaced other merchandise in stores rather than representing only incremental retail space.
- Apparel revenue rose 35% in the second quarter.
- Accessories revenue increased 20%.
- Footwear revenue increased 1%, reflecting softer lifestyle footwear demand and a product mix tilted toward apparel during the World Cup.
- Performance-category sales grew 39%, with football supported by the tournament, running up nearly 30%, training growing nearly double digits and motorsport up 70%.
Gulden said the company expects footwear to remain relatively flat in the third quarter before returning to growth in the fourth quarter. He attributed the slowdown primarily to discounted lifestyle footwear in the market, particularly in men’s styles, as competitors and retailers work through inventory.
However, he said adidas was seeing strong sell-through in its own channels, particularly in performance footwear, and expects demand in running, football and training to support improved wholesale footwear orders later in the year.
Direct-to-Consumer Growth Lifts Margin
Direct-to-consumer sales outpaced wholesale growth during the quarter. Wholesale revenue increased 6%, while company-owned retail sales rose 23% and e-commerce revenue grew 27%. Direct-to-consumer represented 43% of total revenue, compared with wholesale’s 57% share.
North American direct-to-consumer sales rose 39%, while direct growth was 37% in Latin America, 25% in Japan and South Korea, 24% in emerging markets, 22% in Greater China and 12% in Europe.
Gross margin increased to 52.5% in the second quarter from 51.7% a year earlier. Ohlmeyer attributed the improvement primarily to disciplined pricing and promotions, full-price World Cup sales and a favorable direct-to-consumer mix. The company said foreign-exchange effects were broadly neutral, while U.S. tariffs had a negative impact.
Marketing expenses rose 30%, while operating overhead increased 12%. Ohlmeyer said the elevated expense levels reflected World Cup activations, pop-up stores, event-related logistics, additional retail staffing and variable e-commerce costs. He said marketing and overhead growth should normalize in the second half, with full-year marketing spending expected to be around 12% of sales.
Regional Performance and Financial Position
Currency-neutral sales growth was broad-based. North America grew 17% in the second quarter, Greater China increased 15%, Latin America rose 28%, emerging markets advanced 12%, and Japan and South Korea combined grew 18%. Europe rose 6% following strong growth over the prior two years.
Ohlmeyer said inventory rose 12% currency-neutral, slightly above the level at the end of the first quarter. He described inventory as healthy, noting that 90% consisted of current or future-season goods or products in transit, while 9% was from prior seasons.
The company ended the period with nearly €1.2 billion in cash and cash equivalents, despite paying a €500 million dividend and completing a €500 million first tranche of share repurchases. adidas has also repurchased about €250 million under a second tranche. Ohlmeyer said total shareholder returns through dividends and buybacks would be about €1.5 billion this year.
Separately, Ohlmeyer said he will not extend his contract when it expires in March 2027 and will leave the company at year-end. Birgit, a former adidas executive who most recently served as CFO of C&A, will join on Sept. 1 and work with Ohlmeyer through the transition.
About adidas (ETR:ADS)
adidas AG, together with its subsidiaries, designs, develops, produces, and markets athletic and sports lifestyle products in Europe, the Middle East, Africa, North America, Greater China, the Asia-Pacific, and Latin America. It offers footwear, apparel, and accessories and gear, such as bags and balls under the adidas brand; golf footwear and apparel under the adidas Golf brand; and outdoor footwear under the Five Ten brand. It sells its products through its own retail stores; mono-branded franchise stores and shop-in-shops; and wholesale and its e-commerce channels.
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