adidas Touts Turnaround at AGM as Profit Jumps, World Cup Push Builds

Key Points

• adidas’ turnaround accelerated in 2025, with operating profit jumping 54% to €2.056 billion and net income rising to €1.337 billion. Sales grew broadly across regions and channels as the company said the Yeezy business had been replaced.
• Management is leaning into local market strategies and major sports moments, especially the 2026 World Cup. adidas is investing in regional product decisions, local sourcing in China, and U.S. sports partnerships while preparing a heavy marketing push around the tournament.
• The company reaffirmed its upbeat 2026 outlook, maintaining guidance for high-single-digit sales growth and about €2.3 billion in operating profit. It also proposed a higher dividend and continued buybacks, signaling confidence in cash generation.

adidas ETR: ADS executives told shareholders at the company’s annual general meeting that the sportswear group’s turnaround gained momentum in 2025, supported by broad-based sales growth, stronger profitability and renewed brand visibility across sports and lifestyle categories.

Chief Executive Officer Björn said the company had become “a good company again,” while cautioning that the global economic environment remains difficult because of conflicts, currency effects and tariffs. He said the adidas brand grew 13% on a currency-neutral basis in 2025, or 10% excluding the effect of the prior Yeezy business, and highlighted double-digit growth across regions and sales channels.

“The Yeezy business has been replaced, and we grew another 10%,” Björn told shareholders. He said wholesale sales rose 12%, company-owned retail stores grew 13% and e-commerce increased 16%, resulting in a balanced split between wholesale and direct-to-consumer channels.

2025 Profitability Improves

Harm, who presented the financial results, said adidas generated an operating profit of €2.056 billion in 2025, up 54%, with an operating margin of 8.3%. He said gross margin reached 51.6%, up 80 basis points, supported by a stronger brand, healthier inventory levels and better product-market fit.

Net income reached €1.337 billion, and earnings per share rose 67% to €4.90, Harm said. He added that the company faced about €1 billion of foreign exchange headwinds in 2025 and had to compensate for roughly €700 million from the absence of Yeezy revenue.

Inventories increased 17% nominally, which Harm attributed partly to products prepared for the World Cup, including jerseys and balls. He said 65% of inventory was planned for upcoming seasons, 28% was in transit and only 7% related to prior seasons.

The company proposed raising its dividend from €2.00 to €2.80 per share, representing about €500 million in total payouts and a 36% payout ratio. Harm also said adidas had announced a €1 billion share buyback, with €500 million already completed in the first quarter.

Regional Leaders Emphasize Local Strategy

Björn repeatedly stressed that adidas aims to be a global brand with a local mindset, giving regional teams more authority over products, pricing and marketing. He said the company’s headquarters will remain in Herzogenaurach, dismissing rumors of a relocation.

John, who is responsible for the U.S. business, said the company is focusing on running, basketball and U.S. field sports, including American football, baseball, softball and soccer. He said adidas is investing in college sports, including the University of Tennessee and Penn State, and cited the importance of cultural partnerships and activations around the World Cup.

Adrian, the head of China, said adidas has built a “China for China” operating model. He said 65% of products for China are designed locally and 95% are sourced locally, giving the business speed, cultural relevance and cost advantages. He cited the rapid sellout of a Chinese New Year jacket and a pet collection as examples of local consumer insight driving products.

Flavia, who leads Latin America, said the region tripled net sales in euros over four years and now has 29% market share. She said adidas is the No. 1 brand in Peru, Colombia, Chile, Argentina and Mexico, and is competing closely with Nike in Brazil. She said the region focused first on football, then running and training, with women’s products playing an important role in growth.

Performance and Lifestyle Categories Advance

Björn said performance products, which are used for sport, grew 15% in 2025. Football delivered double-digit growth, running rose nearly 30%, and training continued to expand. Golf declined 3%. He said adidas is the global market leader in football and is rebuilding its running presence after years of underperformance.

Lifestyle products grew 12%, with balanced growth across adidas Originals and sportswear. Björn highlighted partnerships with figures including Bad Bunny, Wales Bonner, Kendall Jenner and Pharrell, whose Jellyfish shoe won a U.S. “Shoe of the Year” award, according to the presentation.

He also said apparel is gaining momentum, especially among women, through new materials and silhouettes such as denim and knitwear, while accessories grew 6% after a sourcing problem in China affected the U.S. market.

World Cup and 2026 Outlook

For the first quarter of 2026, Björn said adidas grew 14% and generated operating profit of €705 million, up €100 million from the prior year. Operating margin reached 10%. Gross margin declined by 100 basis points, which he attributed to currency effects and tariffs, while saying the underlying gross margin would have been higher organically.

The company maintained its 2026 guidance for high-single-digit sales growth and approximately €2.3 billion in operating profit. Björn said adidas expects to grow by about €2 billion annually in coming years, although currency translation could reduce reported growth.

The upcoming World Cup is expected to be a major brand event. Björn said adidas will supply 14 teams, about one-third of players will wear its shoes, and every match will use an adidas ball. He said marketing spending will be elevated in the second quarter as the company activates around the tournament.

Governance and Shareholder Returns

Mathias, the outgoing supervisory board chairman, said his tenure included COVID-19, the war in Ukraine, the Kanye West/Yeezy crisis, U.S. tariffs and management changes. He said the company is now “well-positioned” and will be handed over to designated chairman Nassef Sawiris.

Björn also acknowledged that adidas’ share price over the past 12 months had not reflected management’s view of the company’s performance. He said some investors question whether adidas can sustain momentum if competitors recover, but told shareholders he does not believe the company will lose its progress.

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.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.