Adidas shares rose 2.4% in early trading on Wednesday after the German sportswear group raised its full-year operating profit outlook. The company revised its guidance after unscheduled preliminary earnings beat market expectations. Its new target is €2.5 billion, up from €2.3 billion.
The revised outlook includes a €200 million U.S. tariff refund in the third quarter. Adidas plans to reinvest €100 million in the fourth quarter. The refund is a one-off payment, while the reinvestment represents planned spending; both figures factor into the updated annual target.
What drove the higher forecast
J.P. Morgan analysts said Adidas’ third-quarter operating profit came in 9% above expectations excluding the tariff refund. Including it, earnings rose 37% to €1.01 billion, or $1.13 billion. That topped the €742 million analyst consensus provided by the company.
These figures distinguish Adidas’ underlying quarterly performance from the refund’s effect. Operating profit excluding the payment beat expectations, while reported earnings included the full €200 million. The new full-year target also accounts for the €100 million reinvestment planned for the fourth quarter.
Metzler analysts called the update “another compelling proof point of Adidas continuing to expand market share while delivering profitable growth amid a challenging environment”, in a note to investors. But Metzler analyst Felix Dennl said the higher forecast mostly reflected the one-off U.S. tariff refund, not stronger underlying trading. He said it might have limited impact on market expectations.
Product changes and market pressures
Adidas has invested in new styles as its Samba and Gazelle sneakers gradually lose popularity. The company launched its lightest-ever racing shoe, the Adizero Adios Pro Evo 3. In April, Kenyan runner Sabastian Sawe broke the two-hour marathon barrier in the shoe.
Adidas had hoped to build on a strong World Cup showing and stay ahead of Nike and other rivals. But its post-World Cup revenue outlook in July disappointed the market. The company issued its latest update after that reaction, following its preliminary earnings announcement.
Adidas CEO Bjorn Gulden said the footwear lifestyle business faced difficulties from inventory and discounting. “The footwear lifestyle business is currently challenging, mainly due to too much inventory and too much discounting in the marketplace, but we know this will soon normalise again,” he said in a statement on Tuesday.
Gulden identified excess inventory and discounting as the main pressures on the lifestyle footwear business. Adidas is also changing its product offer as two sneaker styles gradually lose popularity. The new guidance, meanwhile, rose partly because of a tariff refund, not stronger underlying trading, according to Metzler analyst Felix Dennl.
The shares rose 2.4% after Adidas improved its annual forecast. The exchange rate given in the company information was $1 = 0.8912 euros.
- adidas
- revenue guidance
- operating profit
- share price
- us tariffs
- sportswear
- adizero adios pro evo 3
- bjorn gulden