adidas AG

Adidas said Q1 revenue grew 14% currency neutral, or 7% reported, to almost EUR 6.6 billion. Gross margin was 51.1%, down 100 basis points year over year, while operating margin was 10.7% and operating profit was EUR 705 million, up by almost EUR 100 million versus last year. Net income was EUR 484 million, up 11% year over year, and basic EPS was pretty much the same as the prior year. Management said FX headwinds should ease through the year, gross margin should improve toward the second half, and they are keeping full-year guidance unchanged. They also said marketing spend will rise in Q2 ahead of the World Cup, while inventory should work down over the next quarters and cash returns for 2026 include EUR 500 million of buybacks already completed, another EUR 500 million planned, and around EUR 500 million in proposed dividends.

Bjorn Gulden framed the quarter as evidence that adidas’ product, brand heat, and execution are working, pointing to strong demand across footwear, apparel, performance, and DTC. He emphasized the World Cup as a major visibility and demand driver, but said the bigger story is building a global brand with a local mindset, more innovation, and stronger local market accountability. His tone was upbeat and emphatic, but he also acknowledged the industry’s discounting, supply, tariff, and geopolitical volatility.

Harm Ohlmeyer highlighted the key financial drivers behind the quarter: 14% currency-neutral sales growth, 51.1% gross margin, and EUR 705 million of operating profit. He said the gross margin impact was driven mainly by FX and U.S. tariffs, each contributing roughly EUR 50 million of pressure, while pricing, discounting discipline, and product mix remained supportive. He also noted inventories were up 13% reported, or 17% currency neutral, because adidas intentionally invested in working capital to secure product availability, and said the company completed EUR 500 million of share buybacks, plans another EUR 500 million, and is proposing about EUR 500 million in dividends.

Analysts focused on whether adidas can sustain above-market growth through 2027-2028, whether margins should improve later in the year, how much World Cup product contributed in Q1, and whether tighter inventory is limiting wholesale sales. Management said the growth plan is bottom-up by market and category, based on local opportunity rather than a spreadsheet, and argued there is still room to gain share in performance, apparel, comfort-oriented footwear, and large emerging markets. On margins, Harm said top line should be stronger in the first half, gross margin should improve in the second half, and Q2 marketing will rise because adidas wants to invest behind the World Cup. Bjorn quantified World Cup product bookings in Q1 at around EUR 250 million plus/minus and said that football’s impact extends beyond one-time event sales into a broader lifestyle and performance trend.