adidas AG: Record Revenue, Record Doubt, and the Economics of a World Cup

That distinction is one reason adidas currently looks materially healthier than PUMA. PUMA's Q2 2026 currency-adjusted sales contracted 9.4%, wholesale fell 14%, DTC was approximately flat, and management guided to a full-year EBIT loss of €50m–€150m. adidas is simultaneously gaining wholesale shelf space and expanding DTC. The PUMA comparison points at something deeper in sporting-goods economics: brand recognition alone is insufficient. Retailer relevance, global assortment breadth, local execution and enough scale to fund product creation and sports marketing without starving the income statement are part of the moat.

Nike provides the opposite scale comparison. It remains much larger: FY2026 revenue was $46.4bn, equivalent to about €40.2bn at the August 7 ECB rate, versus adidas's €24.8bn in FY2025. But Nike's FY2026 currency-neutral revenue fell 2%, Nike Direct declined 8% currency-neutral and its Greater China business remained weak, while wholesale increased 6%. The category leader is repairing many of the same mistakes adidas began repairing in 2023. adidas's recent share gains are real, even though they occur against an incumbent that has been executing below its historical standard.

On and HOKA make the horizontal picture less comfortable. On's Q1 2026 sales grew 26.4% at constant currency, DTC 28.7%, and gross margin reached 64.2%; Deckers' HOKA sales rose 7.7% in its July 2026 quarter and Deckers' consolidated gross margin was 56.4%. These businesses lack adidas's scale and breadth, but they show that the premium performance consumer will migrate toward technical credibility, novelty and specialist product stories. adidas is taking share from weakened large incumbents while simultaneously defending its highest-value running customer against small, focused challengers.

China currently supports rather than undermines the recovery. adidas Greater China grew 16% currency-neutral in H1 2026, with a 56.3% regional gross margin and 27.7% segment operating margin. Li Ning's 2025 revenue grew only 3.2% and its gross margin was 49.0%, while ANTA's 2025 revenue grew 13.3% and gross margin reached 62.0%. adidas appears to be winning back consumers and shelf relevance, particularly compared with Li Ning; ANTA remains the more formidable domestic scale platform.

The most defensible one-phrase description is “company in transition,” but that label needs refinement. adidas has moved beyond distressed turnaround: revenue, gross margin and brand demand have already recovered. It has not yet regained the earnings quality of 2018–2019, when operating margins exceeded 10%. The transition is from demand repair to margin reconstruction.

Qualitative portrait. adidas is a reaccelerating global brand whose product and distribution recovery is proven, while the cost of sustaining that recovery remains unproven.

The company reached this point through repeated reinventions rather than a straight-line compounding history. Adolf “Adi” Dassler registered Adolf Dassler adidas Sportschuhfabrik in Herzogenaurach on August 18, 1949 with 47 employees. The original proposition was technical sporting footwear, and the 1954 World Cup gave the young business a global marketing event when West Germany won the final wearing lightweight boots with screw-in studs. Football sponsorship and product credibility were intertwined almost from birth.

The model broadened early. adidas added apparel with the Franz Beckenbauer tracksuit in 1967; became the official World Cup match-ball supplier in 1970; and by the 1970s had turned sport-specific products such as the Stan Smith into lifestyle franchises. The Run-D.M.C. relationship in the 1980s then helped establish an idea that is now central to the economics: athletic products can acquire cultural utility far beyond sport.

The family era ended badly. After Horst Dassler's death in 1987, adidas became a stock corporation in 1989; Adi Dassler's daughters sold their stakes in 1990, management errors followed, and the company recorded a severe loss in 1992 that brought it close to bankruptcy. Robert Louis-Dreyfus became CEO in 1993 and shifted the business from a sales-led culture to a marketing-led global brand. adidas went public on November 17, 1995. The company's present investor-relations archive confirms the listing date and the current Frankfurt/Xetra identity. Secondary historical sources report a DM59–68 offer range, but I have not found a sufficiently authoritative archived primary source to certify the final IPO issue price or total capital raised, so I do not manufacture those figures.

The next corporate phase was expansion by portfolio. adidas acquired Salomon in 1997 and later bought Reebok in 2006 after selling Salomon. The logic was scale against Nike and access to additional sports and North American distribution. The portfolio outcome turned out less attractive than the strategic story: adidas eventually divested Reebok, while the core adidas brand emerged as the asset that mattered.

From roughly 2015 to 2019, adidas became a high-margin growth story. Revenue rose from €16.9bn in 2015 to €23.6bn in 2019, and operating margin from 8.6% in 2016 to 11.3% in 2019. In those years the market increasingly valued adidas as a global consumer compounder rather than an ordinary apparel manufacturer. The share price and P/E expanded accordingly.

The 2020–2022 period broke that model. COVID interrupted retail and sport; supply-chain bottlenecks and freight costs hit gross margin; China weakened; inventories rose; the Yeezy relationship with Kanye West ended; and operating margin fell from 11.3% in 2019 to 3.0% in 2022. The share finished 2022 almost 50% below its prior-year level. Bjørn Gulden, previously CEO of PUMA and earlier an adidas executive, returned as adidas CEO in 2023.

Gulden's recovery changed operating philosophy before it changed the P&L. The group reduced its fixation on DTC, repaired wholesale relationships, gave markets more local authority, simplified product creation and sold through the remaining Yeezy inventory. The adidas brand then posted 13% currency-neutral growth in both 2024 and 2025; 2025 revenue excluding Yeezy benefited from a clean base because no Yeezy revenue remained in the current year. H1 2026 is also clean: the interim report states that neither H1 2026 nor H1 2025 contained Yeezy business.

The capital-market story has shifted four times in five years: compounder, crisis, turnaround, then share-gain story. July 30 introduced a fifth label: “growth whose margin conversion may be expensive.” Whether that label sticks is the central equity question.

A compact stage map makes the persistence of these strategic shifts visible:

Source: adidas ten-year overview, 2024–2025 annual reports and H1 2026 report.

The lasting capability that runs through this history is not flawless product forecasting. adidas has repeatedly mismanaged portfolios, inventory and channel strategy. Its proven capability is brand regeneration: technical sports franchises can become lifestyle franchises, archive products can return after long dormancy, and retailer relationships can be repaired when the organization refocuses on product and local consumers. That is a real asset. The cost of regeneration, which includes athlete contracts, federation sponsorships, marketing campaigns and distribution support, is equally real.

Financial vertical, business model and moat

The ten-year financial record makes the equity's current debate much easier to frame than the Q2 headline does. The business can operate above a 10% EBIT margin; it did so in 2018 and 2019. It can also destroy several hundred basis points of profitability very quickly when product, inventory and distribution get out of alignment. That operating leverage works in both directions.

Source: adidas ten-year overview and H1 2026 interim report.

The 2022–2023 collapse is important because it establishes what can permanently damage the earnings model. Inventory hit €5.97bn in 2022, gross margin fell below 48%, and EBIT margin fell to 3%. The eventual recovery came through inventory normalization, less discounting, stronger full-price sell-through, product renewal and wholesale repair. By 2025 gross margin had recovered to 51.6% and EBIT margin to 8.3%. The H1 2026 margin of 9.6% says the old earnings architecture is accessible again, but it has not yet been fully recovered.

Inventory is the first yellow flag in an otherwise healthy operating picture. At June 30, 2026 inventories were €5.969bn, 13% higher reported and 12% higher currency-neutral; average operating working capital reached 24.0% of sales versus 20.7% a year earlier. Adjusted net borrowings rose to €5.193bn and adjusted net borrowings/EBITDA to 1.6 times. Some inventory growth is rational ahead of high demand and global launches, but inventory is again growing faster than reported revenue. That relationship deserves more attention than the absolute debt number.

The balance sheet is not distressed. At year-end 2025 adjusted net borrowings were €4.331bn and leverage 1.4 times EBITDA; the increase through June partly reflects working capital, shareholder distributions and the buyback. The group had €1.159bn of cash at June 30. adidas is simultaneously conducting a 2026 share repurchase program of up to €1bn, with a second €500m tranche launched in June, after paying a €2.80 dividend for 2025. The buyback equals roughly 3.5% of the current equity value, which is material but not transformative.

Cash conversion looks better over five years than a glance at 2025 suggests, but IFRS 16 requires care. Continuing-operations operating cash flow was €2.873bn in 2021, negative €394m in 2022, €2.630bn in 2023, €2.910bn in 2024 and €751m in 2025. Against cumulative continuing net income of about €3.889bn, cumulative OCF was €8.770bn, a 2.26-times ratio. That high ratio reflects working-capital timing and non-cash charges rather than a magical conversion advantage: 2022 absorbed cash into inventory, 2023 released it, and 2025 again absorbed working capital.

There is an additional accounting issue. adidas classifies interest paid and lease principal within financing cash flow, so OCF is not a complete “owner earnings” number for a retailer with large leased-store obligations. In 2021 lease repayments alone were €572m and in 2022 €631m. Any valuation that simply takes reported OCF less conventional capex will materially overstate distributable cash.

Capital expenditure is modest relative to revenue because adidas outsources almost all manufacturing. Cash capex was €477m in 2025, of which 52% went to controlled space such as new or remodeled stores and shop-in-shops, 27% to IT, 6% to logistics and 15% to administration. Non-IFRS-16 depreciation and amortization was €482m, almost identical to cash capex. That relationship suggests much of present capex is replacement or maintenance rather than pure incremental growth. adidas does not disclose a maintenance/growth split; I estimate maintenance capex at roughly 65–75% of current cash capex, or €310m–€360m. This is an analytical assumption, not company guidance.

The manufacturing model is asset-light but not supply-chain-light. Independent partners produce almost 100% of products. In 2025 Vietnam represented 27% of sourcing volume, Indonesia 18%, China 16%, and Asia overall 92%. No single factory produced more than about 6% of sourcing volume. adidas worked with 123 independent manufacturing partners, 65% of which had relationships lasting at least ten years. Scale provides supplier access and diversification; geographic concentration creates tariff and geopolitical exposure.

Revenue comes from three product families rather than accounting segments. Footwear was €14.232bn, or 57% of 2025 revenue; apparel €8.764bn, 35%; accessories €1.815bn, 7%. Profit by product is not disclosed. The operating segments are geographic markets, meaning any assertion that “football carries X% margin” or “Samba earns Y% margin” would be fabricated.

The channel structure explains much of the cost model. Wholesale gives adidas broad physical distribution with lower owned-store fixed cost and less lease intensity. DTC gives more control over assortment, data, presentation and gross merchandise margin but requires stores, e-commerce fulfillment, labor and leases. Gross margin alone cannot prove DTC superiority. The economic question is contribution after fulfillment and retail operating expenses. adidas does not publicly disclose gross margin by channel.

Q2 pricing evidence was nevertheless encouraging. Gross margin increased 80 basis points to 52.5% despite negative freight, sourcing, tariff and currency effects. Management attributed the improvement partly to better full-price selling and favorable channel mix. This is direct evidence of pricing and sell-through health. The missing piece is discount depth: adidas does not publish a global percentage of units sold full price, average markdown percentage, or DTC-versus-wholesale gross margins. That leaves gross margin and inventory as the most useful public proxies.

Moat verdict. Four advantages qualify as genuine: brand memory, global distribution, sports-marketing access and operating scale. None is impregnable.

Brand memory is unusually valuable because adidas can monetize archives repeatedly. Samba began as a football shoe, Stan Smith in tennis, Superstar in basketball; Originals turns old performance design into streetwear. This lowers the probability that the company's entire commercial relevance depends on one current technology platform.

Distribution is the second moat. No customer represented more than 5% of 2025 sales, wholesale remains 60% of revenue, and the group also owns a global DTC network. PUMA's present contraction shows why this matters. A brand can remain widely recognized while losing shelf allocation and economic relevance if wholesalers do not want enough of its product. adidas's return to double-digit wholesale growth in 2025 and another 6% in Q2 2026 is evidence that this part of the moat is working again.

Sports-marketing access is the third advantage. adidas has supplied every official men's World Cup match ball since 1970 and has decades-long federation, club and athlete relationships. These contracts are expensive: promotion and advertising commitments totaled €7.897bn at the end of 2025. But their scarcity matters because a new entrant cannot instantly buy 70 years of association between adidas and elite football.

Scale is the fourth. It spreads product design, marketing, logistics and technology over roughly €25bn of annual revenue while outsourcing production. The scale moat is relative, however. Nike remains larger, and On can currently earn a substantially higher gross margin because its premium technical proposition concentrates on a narrower product range. Scale does not prevent a specialist from taking a profitable niche.

Technology is supportive rather than a stand-alone moat. Boost, Torsion, Adizero and other platforms matter to performance credibility, but consumers can and do switch among Nike, adidas, On, HOKA, ASICS and other brands. There are no meaningful network effects or hard switching costs. Brand and distribution do more defensive work than patents.

Governance currently deserves a medium-positive rather than premium score. Gulden became CEO in 2023 and has delivered a much faster revenue, gross-margin and inventory recovery than the 2022 crisis suggested. His contract was extended through the end of 2030 in March 2026. The market nevertheless punished March guidance because the €2.3bn EBIT outlook fell well below expectations, and it punished July results again when that same guidance remained unchanged. Management credibility on product and demand is high; credibility on the cadence of margin recovery is still being tested.

CFO succession is orderly rather than abrupt. Harm Ohlmeyer, CFO since 2017 and an adidas employee for roughly three decades, decided not to extend his Executive Board mandate. Birgit Kretschmer was appointed to the Board effective September 1, 2026 and is scheduled to succeed him as CFO at year-end, creating an overlap period. The announcement adds governance uncertainty, but it does not resemble an unexplained immediate resignation after an accounting problem.

Industry and horizontal competition

The sporting-goods industry is structurally growing but mature enough that share shifts matter more than category penetration alone. McKinsey and the World Federation of the Sporting Goods Industry estimated roughly 7% annual sector growth from 2021–2024 and projected around 6% annually from 2024–2029. North America and Asia-Pacific remain the largest growth pools. The sector is simultaneously fragmenting: smaller performance brands are capturing consumers from large incumbents, especially in running.

For adidas, the relevant cycles overlap. There is a consumer cycle because shoes and sports apparel are discretionary; an inventory cycle because over-ordering leads to markdowns several quarters later; a fashion cycle because franchises can become saturated; a sports-event cycle around the World Cup, Olympics and European Championships; and a product-innovation cycle in running and technical footwear. Extrapolating from one quarter is especially hazardous when this many cycles run at once.

The industry profit pool sits disproportionately with brands rather than contract manufacturers because the brands control design, consumer demand, athlete relationships and distribution. adidas's outsourced model is direct evidence: almost all production is performed externally while the company retains product development, marketing and channel economics. The same structure applies broadly to Nike and many challengers.

Supplier bargaining power is contained by scale and diversification, but governments can change the equation through tariffs. adidas sources 92% of volume from Asia and therefore has material U.S. import exposure. The U.S. emergency-tariff regime became especially important in 2026 after the Supreme Court struck down the relevant tariff authority, opening the door to refunds. adidas filed refund claims, has already received a small first refund, and says a potential $250m–$300m recovery is excluded from its €2.3bn guidance.

At the August 7 ECB exchange rate, $250m–$300m is approximately €217m–€260m. Using roughly 174m shares after allowing for buybacks, that is €1.25–€1.49 per share of gross cash claim, or roughly €0.94–€1.13 after applying a tax rate around the recent 24% level. Because this is a one-off recovery rather than recurring earnings, its equity value should be close to the expected net cash received, not the refund multiplied by a P/E ratio.

I treat the refund as an option rather than base-case earnings. adidas's CEO said in May that the company believed it had a very good chance of receiving approximately $300m, and other importers have been processing claims after the court ruling. But the court did not itself mechanically settle every company's refund amount and timing. My subjective probability is 75%; at the midpoint after tax, that produces an expected option value of roughly €0.8 per share. That probability is an analytical estimate, not a legal forecast.

The peer cross-section shows where the category's economic profit is moving.

† Nike's FY2026 reported gross margin includes tariff-related effects; its Q4 included a large expected tariff recovery, so the reported figure is not a clean structural comparison. USD market values converted at EUR 1 = USD 1.1535 on 2026-08-07. Sources: company releases and market data.

Nike became the global platform that over-optimized DTC and product scarcity. Its FY2025 revenue had already fallen sharply; FY2026 revenue stabilized around $46.4bn, but Nike Direct was still falling while wholesale recovered. The comparison is strategically useful because adidas made a similar DTC mistake and started reversing it earlier. adidas's advantage today is execution momentum. Nike's advantage remains scale, North American cultural reach and the financial capacity to re-invest aggressively. A successful Nike product recovery is therefore a genuine 2027–2029 risk to adidas.

PUMA became the clearest example of being stuck between global scale and specialist differentiation. Its Q2 revenue contraction and guided annual EBIT loss show that broad brand recognition has not protected its economics. Arthur Hoeld, a former adidas executive, became PUMA CEO in 2025, creating a direct organizational link between the two companies.

The planned ANTA-PUMA transaction also needs precise language. ANTA agreed to acquire a 29.06% PUMA stake from Artemis for about €1.5bn. The cash goes to the selling shareholder, not into PUMA's operating balance sheet. Describing the transaction as “PUMA is being recapitalised by a strategic shareholder” is therefore economically inaccurate unless a later primary capital injection occurs. It is a strategic change in ownership, not recapitalization. This is one place where the adidas work would contradict a sibling PUMA report if that report assumes the share purchase itself funds PUMA.

On became the premium-running specialist with unusually strong direct consumer economics. Q1 2026 constant-currency sales increased 26.4%, footwear 24%, apparel 57.5%, Asia-Pacific 61.4%, and gross margin reached 64.2%. On is far smaller than adidas, so it cannot match adidas's breadth of football, Originals, training and global team sponsorship. Its threat is concentrated where it matters most: the premium running consumer whom adidas wants to win with Adizero.

Deckers' HOKA plays a similar role with a more mature growth profile. HOKA sales increased 7.7% in Deckers' latest July 2026 quarter, while Deckers DTC rose 13% and consolidated gross margin was 56.4%. HOKA no longer grows at the rates that first forced Nike and adidas to notice it, but the franchise still proves that an athletic-footwear niche can become a multibillion-dollar global business without the incumbent's historical scale.

China is the most revealing regional battle. adidas Greater China H1 2026 growth of 16% currency-neutral and 27.7% segment operating margin show that a Western sportswear brand can regain profitable local relevance after several weak years. Li Ning's FY2025 revenue growth was 3.2% with a 49.0% gross margin; ANTA grew 13.3% with a 62.0% gross margin and 23.8% operating margin. adidas has currently re-opened a gap over Li Ning on momentum, but ANTA combines domestic distribution, local consumer knowledge and a multi-brand model at substantial scale.

The ecological niche is clearer than “number two sports brand.” adidas is the only global-scale challenger to Nike with roughly €25bn revenue, a top-tier football franchise, a large lifestyle archive and meaningful wholesale plus DTC reach. PUMA lacks its present momentum; On and HOKA lack its breadth; Chinese brands lack its global distribution. Its vulnerability is equally specific: specialist brands can take technical consumers at the premium end while Nike can retake mainstream shelf space from above.

Current fundamentals and market narrative

Q2 2026 was one of the strongest demand quarters adidas has reported and one of the most violent adverse share-price reactions in its public history. Net sales reached €6.743bn versus €5.952bn a year earlier; currency-neutral growth was 14%. DTC rose 25%, e-commerce 27%, own retail 23% and wholesale 6%. Performance rose 39%, apparel 35%, accessories 20%, while footwear rose only 1%. Regional currency-neutral growth was 28% in Latin America, 18% in Japan/South Korea, 17% in North America, 15% in Greater China, 12% in Emerging Markets and 6% in Europe.

Gross margin at 52.5% was 130 basis points above the pre-result company-compiled consensus of 51.2%. Revenue was also about €113m ahead of the €6.630bn consensus. EBIT was the blemish: €574m versus €623m consensus, an 8% miss, and operating margin was 8.5% versus a 9.5% consensus. Net income from continuing operations was €398m and EPS €2.10.

This distinction matters because the quarter did not fail economically in the way a typical apparel miss fails. There was no revenue shortfall, gross-margin collapse or visible demand slowdown. The miss occurred below gross profit because marketing/POS spending rose to €924m from €712m. Other operating expenses were €2.983bn. Management made an explicit choice to spend through the income statement while the World Cup audience was available.

H1 gives a less distorted picture. Sales were €13.335bn, currency-neutral growth 14%, gross margin 51.8%, EBIT €1.279bn and operating margin 9.6%. Net income was €882m. DTC increased 23%, e-commerce 26%, own retail 21%, wholesale 7%. Marketing/POS expense was €1.680bn, 12.6% of sales, compared with €1.458bn and 12.0% a year earlier.

Q1 had already shown that the business can convert revenue at a higher margin. Q1 currency-neutral sales increased 14%, EBIT rose 16% to €705m and operating margin was 10.7%. The €705m EBIT also exceeded the company-compiled €647m analyst consensus. Q2 did not invalidate the turnaround. It interrupted the expected straight-line margin progression.

The World Cup verdict. The historical evidence leans toward “investment” rather than “overspend,” but it does not justify treating every euro of 2026 marketing as high-return capital.

The three prior tournaments form a useful natural experiment, though none is clean enough to establish causality.

Sources: adidas 2014–2019 results and current ten-year overview. In 2014 H1 marketing investment increased 7%, partly reflecting World Cup activity; in 2018 marketing/POS expense rose 10% to €3.001bn, with the World Cup explicitly among the drivers; in 2022 marketing rose 8% to €2.763bn amid the World Cup and other global sports events.

The strongest evidence comes from 2018. adidas raised marketing sharply, yet full-year gross and operating margins improved, then 2019 revenue rose another 8%, gross margin reached 52.0%, operating margin 11.3%, and marketing intensity fell as the event spending normalized. That is the pattern investors would want to see in 2027: slower revenue but a falling marketing ratio and higher operating margin.

2014 also does not show a post-tournament give-back. Revenue rose more than 16% in 2015 and another 9% in 2016 while margins recovered. The causality is weaker because currency, Russia, golf, the “Creating the New” strategy and product cycles all mattered. It shows only that a tournament marketing spike did not mechanically pull demand forward and leave a revenue hole.

2022 is the bearish observation, but it is contaminated beyond usefulness as a pure World Cup test. Revenue fell in 2023 and operating margin collapsed, yet the company had terminated Yeezy, which had generated more than €1.2bn of 2022 sales, while supply-chain and inventory problems were simultaneously forcing discounts. adidas then sold remaining Yeezy inventory during 2023–2024. The 2023 decline cannot reasonably be assigned to a post-World-Cup demand give-back.

The most evidence-based conclusion is narrower: adidas has historically been able to convert major tournament visibility into subsequent-year revenue without a systematic give-back, especially in 2014 and 2018. There is no historical evidence strong enough to estimate a dependable ROI on World Cup marketing, and 2026 spending should be judged by 2027 full-price sales, market share and margin rather than by Q2 EBIT alone.

The 2026 event itself already generated concrete commercial evidence. Financial Times reporting put World Cup-linked sales at about €1.5bn, said adidas sold more than 17m jerseys and reported football sales at roughly twice the 2022 tournament level. The distinction between “World Cup-linked sales” and incremental sales matters: much of that €1.5bn would have existed as ordinary football revenue even without the tournament. I therefore do not treat €1.5bn as incremental revenue in the valuation model.

Guidance geometry. The held €2.3bn EBIT target is more informative than the €49m quarterly miss.

Management raised currency-neutral FY2026 revenue guidance from high-single-digit growth to 9–10%, while maintaining EBIT around €2.3bn. The pre-result analyst consensus was approximately €2.499bn EBIT, so the guide sits about €199m below what investors had been underwriting.

Using the H1 results, adidas has already earned €1.279bn of the €2.3bn target. The implied H2 EBIT is therefore €1.021bn. Reported full-year revenue is not directly given because the growth guidance is currency-neutral, and the stronger euro has been a translation headwind. If FY2026 reported sales land around €26.4bn–€26.8bn, a range consistent with H1 FX effects and the pre-result consensus, H2 revenue would be about €13.1bn–€13.5bn and H2 operating margin only about 7.6%–7.8%.

† Assumes FY2026 reported revenue of €26.4bn–€26.8bn; management guides currency-neutral growth rather than reported euro sales. H2 2025 is derived from FY2025 less H1 2025.

This arithmetic slightly softens the bearish claim that “all incremental revenue is being consumed by costs.” H2 EBIT under the €2.3bn guide would still rise by roughly €120m year on year. Operating margin would also exceed the roughly 7.1% H2 2025 level. The stricter conclusion is that the incremental revenue added by the July guidance upgrade is being assigned almost no incremental EBIT relative to what investors expected before the quarter. That is a real deterioration in marginal economics, not a collapse in absolute profitability.

The cost answer is also mixed. Q2 contains a clearly event-driven spike: marketing/POS reached 13.7% of sales compared with 12.0% for full-year 2024 and 12.6% in H1 2026. That ratio should decline when the World Cup ends. Management has also said it wants to continue elevated brand and sales investment beyond this year. The likely outcome is a one-time tournament burst sitting on top of a structurally higher reinvestment philosophy. The market is right to lower the speed at which operating margin reaches its old 11% peak; treating 13.7% marketing intensity as the permanent run rate would go too far.

2027 bridge. The comparison base is the most important 12-month risk, and the model below makes the pull-forward explicit rather than hiding it inside a generic growth assumption.

I use approximately €26.6bn as a base reported-revenue estimate for 2026. This is my estimate, not company guidance. The World Cup-linked €1.5bn reported by the FT is not treated as incremental. In the base case I assume only €0.8bn of 2026 revenue represents event demand that reverses in 2027; the bear case assumes €1.2bn, the bull case €0.5bn. Structural growth from running, lifestyle, China, wholesale shelf gains, DTC and pricing then adds back different amounts.

The model deliberately forces the argument. In the bear case, adidas grows 14% through the World Cup period and then contracts in 2027. That would mean the tournament inflated the top line more than the underlying franchises compounded. The base case assumes underlying share gains are genuine but produces only low-single-digit reported growth against the event year. The bull case requires running, China, wholesale and lifestyle to keep enough momentum that the World Cup reversal becomes a small drag rather than a revenue cliff. Q2 and H1 data support the existence of structural growth outside football, particularly in running and China; they do not prove its 2027 magnitude.

The earnings bridge can be better than the revenue bridge. If €300m–€450m of unusually high tournament marketing does not recur while product gross margin remains near 52%, 2027 EBIT can rise even if revenue grows only 1–2%. That operating leverage is the strongest bull argument for the next twelve months. Conversely, if marketing stays near 12.5–13% of sales because management regards elevated spending as the cost of defending share, then 2027's revenue slowdown becomes much more dangerous.

Price-move attribution. The July 30 closing decline was mainly an expectations reset around annual profit, with the quarterly EBIT miss and CFO transition secondary.

The cleanest quantitative anchor is the €199m gap between pre-result FY2026 EBIT consensus of roughly €2.499bn and management's unchanged €2.3bn target. After a roughly 24% tax rate, that is approximately €151m or €0.86 per share of earnings. At a 16–20-times earnings multiple, the shortfall is worth roughly €14–€17 per share. The actual closing loss was €21 per share. That does not prove causality, but it shows that most of the closing move can be reconciled with the withheld annual profit upgrade alone.

The €49m Q2 EBIT miss would be about €0.21 per share after tax, worth perhaps €3–€4 at an 18-times multiple if it were permanently lost. Adding that mechanically to the annual guidance gap would double-count some of the same disappointment, because the full-year consensus already embedded the expectation that Q2 and H2 profits would add up to more than €2.3bn. Its analytical role is evidence about the reason the annual upgrade did not happen, not a separate full €4 of value destruction.

The CFO announcement likely contributed to risk perception but cannot be credibly assigned a specific number of share-price points. The successor was named at the same time and will overlap with Ohlmeyer, reducing the probability that the departure signals an immediate financial-control problem. A precise “2% from CFO” attribution would be false precision.

Nor is there evidence that a broad sportswear de-rating explains most of the move. Reuters and other contemporaneous reporting framed the selloff around adidas-specific profit expectations, World Cup spending and the unchanged outlook. The extreme intraday 19% fall followed by an 11.5% close is better interpreted as an expectations air pocket in a stock that had run ahead of its profit guide than a new sector-wide valuation regime.

March provides the useful precedent. On March 4, adidas shares fell as much as about 7% after the initial €2.3bn 2026 EBIT outlook came in below market expectations; Visible Alpha consensus cited at the time was around €2.72bn. Q1 then beat EBIT consensus by €58m, showing management had built conservatism into quarterly expectations. By July, however, management still had not raised the €2.3bn annual target. The market's March fear about weak demand was too pessimistic; its fear that management would protect investment spending rather than maximize 2026 EBIT has so far been correct.

That is the pattern behind both 2026 selloffs. Investors repeatedly wanted Gulden to convert brand momentum into a faster earnings upgrade. Gulden repeatedly chose a lower near-term profit bar and more reinvestment. This is not necessarily bad management. It is a mismatch between management's time horizon and the multiple investors were willing to pay for the recovery.

Valuation, risks and catalysts

At €164.05, adidas is no longer priced like the fully repaired 2019 compounder, but neither is it priced for a return to crisis. Current trailing P/E is roughly 21 times. MarketScreener's current estimates put the stock at about 19.5 times 2026 earnings and 15.8 times 2027 earnings. Those numbers are broadly consistent with my own 2026–2027 earnings bridge.

Historically, today's reported P/E looks low. adidas's own ten-year table shows year-end P/Es of 22.7 times in 2025, 55.9 in 2024, not meaningful in 2023, 102.4 in 2022, 33.9 in 2021, 29.9 in 2019, 21.6 in 2018, 23.7 in 2017 and 27.8 in 2016. On those positive-earnings year-end observations, roughly 21 times sits around the bottom decile. The comparison is heavily distorted because the enormous 2022–2024 multiples resulted from depressed earnings, so “bottom-decile P/E” does not mean the equity is automatically cheap.

Price history tells the same story. The Xetra share has traded as high as roughly €336 over the past decade and as low as about €93. The 2021 peak reflected expectations for high-quality global growth; the 2022 collapse reflected China, inventory, Yeezy and management disruption. The recovery to the €200-plus area in 2024–2025 represented a turnaround re-rating. At €164, the market now asks for evidence that the earnings recovery continues rather than paying in advance for a return to peak margins.

Peer multiples need context rather than a ranking. Nike's current trailing P/E is elevated because present earnings are depressed by its turnaround. PUMA has little useful P/E signal while operating profit is guided negative. Deckers trades at a lower current P/E despite higher consolidated gross margin, reflecting decelerating HOKA growth and the market's changing confidence in its growth duration. On receives a structurally higher growth valuation because its sales and gross margin are still expanding far faster than adidas. A peer average would obscure more than it explains.

The absolute valuation starts with cash passthrough. Five-year aggregate continuing OCF of €8.77bn divided by aggregate continuing net income of €3.89bn gives 2.26 times. Annual cash conversion is wildly uneven: 2022 was negative as inventory rose, 2023 and 2024 benefited from reversals, and 2025 OCF of €751m was only about 0.55 times €1.377bn of continuing net income. The business converts accounting profit into cash over a cycle, but working capital can move billions between years.

Maintenance capex is not disclosed. I use €310m–€360m based on the near-match between €477m 2025 cash capex and €482m non-lease depreciation/amortization and the fact that 52% of capex went to controlled retail space. Because lease principal and interest sit outside reported OCF, I also normalize those payments. On this basis, normalized owner earnings for the present business are roughly €1.2bn–€1.5bn rather than the €2bn-plus one might incorrectly infer from high-cycle OCF. At a €28.7bn equity value, that is roughly a 4.2–5.2% owner-earnings yield, or about 19–24 times owner earnings. The gap from the roughly 19–21-times headline earnings multiple is below the template's 30% threshold, so accounting EPS remains usable in the scenario valuation.

My FY2026 base starts around €26.6bn reported revenue, €2.3bn EBIT and approximately €8.5–€8.8 of EPS. The precise EPS will depend on FX, financial expense, tax and average shares after buybacks. For 2027, the revenue bridge above produces a much wider earnings range because marketing normalization and gross margin matter more than top-line growth.

† Includes the current €2.80 annual dividend as a simple return proxy and assumes the valuation is reached over roughly twelve months. Scenario analysis is part of a research framework, not investment advice.

The conservative case assumes the World Cup base reverses materially, marketing remains elevated and gross-margin pressure returns through markdowns. The base case assumes 2027 revenue barely grows, but marketing normalization and continued full-price selling lift EBIT margin close to 10%. The optimistic case requires a cleaner handoff: no meaningful lifestyle collapse, running remains strong, China keeps gaining share, Nike's recovery remains slow, and marketing intensity falls enough for margin to exceed 10%.

The striking feature is that the base case does not require strong 2027 revenue growth. It requires revenue quality. A company generating €27bn of sales at 9.8% EBIT margin is worth much more than one generating the same sales at 8.5%. That gap is why July's refusal to raise EBIT guidance matters more than another one or two percentage points of sales growth.

The tariff refund stays outside all three operating scenarios. Gross value is €1.25–€1.49 per share; estimated after-tax expected value is about €0.8 per share at my 75% probability. Even full recovery would not repair a structurally weak margin thesis. It is useful optionality, not a reason to own the equity.

The market's current expectation appears close to my base case. At roughly 19.5 times 2026 estimates but about 15.8 times 2027 estimates, the price assumes meaningful EPS recovery after the World Cup without demanding that adidas immediately regain the 2019 11.3% margin. That is a sensible expectation. The potential mispricing lies in how the market treats 2027 marketing: a faster normalization can create earnings growth despite weak reported revenue; persistence above 12.5% of sales can prevent that earnings recovery.

Margin-of-safety verdict: none. The current €164.05 price is 13–26% above my conservative €130–€145 fair-value range. It therefore carries no discount to the downside case.

The most fragile base assumption is the 2027 margin recovery from an implied roughly 8.6% FY2026 level toward 9.8%. If only 70% of the assumed margin improvement occurs, operating margin is roughly 9.4–9.5%; holding other assumptions constant reduces base fair value to around €170–€178 instead of roughly €182 at the midpoint. The current price still survives that sensitivity, but expected return becomes thin.

A harsher discipline is the “flat earnings for three years” test. With EPS and the share price flat, the current €2.80 dividend produces only about 1.7% annual cash return. The German 10-year government bond yielded about 3.12% on August 7, 2026. Under that flat-earnings assumption, there is no margin of safety at this buy price.

The stock sits close to a “good company, ordinary price” rather than a “good company, bad price.” Waiting becomes attractive because the business itself is moving into its hardest comparison year. A purchase around €105–€115 would offer the required discount even if 2027 turns out materially worse than consensus.

The permanent-loss risks concentrate in five variables.

The highest-probability risk is the 2027 comparison base. I assign high probability and medium-to-high impact to a sharp growth slowdown; a small outright decline is plausible. The indicator is football/apparel growth once the World Cup anniversary begins. If revenue turns negative while inventory remains double-digit higher, discounts would pressure gross margin and the market would reclassify 2026 as pulled-forward demand.

Structurally higher marketing intensity carries the highest operating impact. I put it at medium probability and high impact. A marketing ratio above roughly 12.5% through 2027, when the tournament is no longer present, would imply that share gains require permanently more spending. If gross margin stays around 52% but marketing absorbs another 100 basis points, the path back toward 11% operating margin becomes much longer, and the P/E should compress.

Inventory is a medium-probability, high-impact bridge between the first two risks. June inventory of €5.969bn was up 13%, while reported H1 sales rose roughly 10%. If inventory growth exceeds revenue by more than about eight percentage points for two quarters, the probability of future markdowns increases materially. The transmission would be inventory to discounts, gross-margin erosion, weaker cash conversion and then a lower multiple.

Competition is medium probability and high impact over three to five years. On already has a 64% gross margin and rapid premium-running growth; HOKA remains a credible running franchise; Nike has far greater scale and is rebuilding wholesale. The hard signal would be adidas Running growth falling below mid-single digits while Nike/On/HOKA accelerate. That would turn today's share gains from structural to cyclical.

Tariffs and FX are medium probability but lower permanent-loss risk than the previous items because the sourcing network is diversified across Asian countries and the refund is a potential positive offset. The danger rises if tariff treatment changes again while EUR strength simultaneously reduces translated revenue and sourcing savings fail to compensate.

Management transition is a lower-probability permanent-loss risk. The CFO handover is planned and overlaps. It becomes material only if it coincides with working-capital surprises, guidance credibility deteriorating further, or unexplained changes in accounting judgments.

Positive catalysts over the next year are correspondingly concrete: Q3/Q4 gross margin holding above 52%; full-year EBIT moving above €2.3bn; inventory growth slowing below sales growth; a U.S. tariff refund; marketing intensity falling sharply after the World Cup; and evidence that running, China and wholesale growth continue once football comparisons normalize. Negative catalysts are an EBIT cut, 2027 revenue guidance below zero, persistent marketing above 12.5%, inventory growth above sales by a wide margin, or a renewed Nike/On share surge.

The next scheduled adidas earnings release is the nine-month report on October 29, 2026.

The dashboard is deliberately centered on gross margin, inventory, marketing and normalized sport-category growth. Those variables distinguish a durable brand recovery from a World Cup sales spike better than the headline quarterly revenue number.

Cross-synthesis and final research conclusion

Vertically, adidas has proven one capability over seven decades that matters more than any particular shoe: it can repeatedly rebuild relevance by connecting performance sport to culture and then distribute that relevance globally. The 1954 football boot, the World Cup ball relationship, Superstar, Stan Smith, Samba, Predator, Boost, Originals and now Adizero belong to different eras, but the commercial mechanism is consistent. Sport supplies authenticity; marketing supplies reach; lifestyle extends the revenue life of the product; wholesale and DTC turn that demand into global distribution.

The company's failures have also repeated. Portfolio ambition produced Salomon and Reebok without creating a permanently superior conglomerate. A narrow DTC strategy weakened wholesale relationships. Yeezy created extraordinary high-margin demand and then became a concentration shock. Inventory planning amplified the 2022 downturn. adidas's history does not justify a “world-class execution” premium. The premium-quality asset is the brand system, not uninterrupted managerial precision.

Gulden's turnaround has repaired the right variables. 2025 brand revenue rose 13% currency-neutral for a second straight year, wholesale and DTC both grew, gross margin reached 51.6%, operating margin recovered to 8.3%, and H1 2026 pushed margin to 9.6%. No Yeezy revenue contaminates the H1 2026 versus H1 2025 comparison. The recovery has crossed the threshold from narrative into audited economics.

The next threshold is harder because the easy recovery gains have already happened. Taking gross margin from 47.5% to above 51% involved removing abnormal discounting and inventory problems. Taking EBIT margin from 8.3% toward the old 11% peak requires a more delicate trade-off. adidas must fund athletes, football federations, product stories, local activation, stores and digital commerce strongly enough to defend share while extracting enough overhead and marketing leverage that shareholders receive the economics of scale.

Q2 offered the market an uncomfortable demonstration of that trade-off. Customers gave adidas exactly what investors wanted: record revenue, 14% currency-neutral growth, strong DTC, strong China and extraordinary Performance growth. Management then spent the incremental gross profit aggressively. The business performed. The stock fell because the profit expectations performed better than the profit itself.

The €924m debate is framed too crudely when it is described as “investment versus overspend.” The entire €924m line cannot be assigned to the World Cup; the incremental €212m is the cleaner tournament-heavy signal. Historical evidence from 2014 and 2018 shows that adidas can spend heavily around a World Cup and continue growing the following year. The 2022–2023 case does not refute that because Yeezy, inventory and supply-chain disruption overwhelm the comparison. The historical record therefore argues against treating tournament marketing as a transient revenue gimmick. It does not prove that the 2026 campaign earns an adequate incremental return.

The first real test arrives in 2027. I model base revenue growth of only around 2%, with the World Cup reversal subtracting about €0.8bn and structural share gains adding about €1.25bn. That is intentionally less optimistic than extrapolating 2026's 14%. The equity can still work under that muted revenue scenario because several hundred million euros of event-heavy marketing can normalize. The business does not need another double-digit sales year to grow EPS. It needs marketing productivity.

That distinction is where the July selloff may eventually prove excessive. An investor valuing adidas purely by the Q2 operating margin is matching a tournament-period expense with only one quarter of the benefits from that expense. The accounting timing is asymmetric. A jersey sale produces revenue now, while some brand impressions and consumer acquisition may persist. Marketing expense is recognized when the campaign occurs; the brand asset created internally is generally not capitalized. A lower Q2 EBIT therefore does not establish lower lifetime economics.

The same selloff may nevertheless prove directionally right. Management did not merely explain away €212m of World Cup spending. It raised sales guidance and refused to raise annual EBIT. It also said brand and sales investment will continue beyond 2026. The market learned that management intends to reinvest more of today's demand strength than consensus expected. That is a harder valuation signal than the Q2 miss itself.

The H2 geometry says the business is not falling apart. An implied €1.021bn H2 EBIT would still exceed the roughly €900m earned in H2 2025. The implied 7.6–7.8% H2 margin would be above the prior year's roughly 7.1%, though well below H1's 9.6%. So the guide contains continued annual improvement, just less operating leverage than the market wanted.

The peer picture strengthens the argument that adidas demand is fundamentally real. PUMA is shrinking, losing wholesale volume and guiding to an operating loss. Nike remains much larger but is still repairing DTC and China. adidas is gaining wholesale and DTC at the same time. Greater China is growing 16% currency-neutral with a 27.7% segment margin. Those outcomes do not arise from World Cup jerseys alone.

The challengers prevent complacency. On's 64.2% gross margin says specialist consumers will pay extraordinary premiums for technical running credibility. Deckers' 56.4% margin says HOKA remains economically powerful even after growth slows. The industry no longer funnels all technical running profit to Nike and adidas. adidas must reinvest in Adizero and other performance franchises even when investors would prefer near-term EBIT.

PUMA makes the opposite point about scale. Its brand is globally recognizable, yet that has not protected distribution economics. ANTA's purchase of a 29.06% stake from Artemis changes strategic ownership but injects no operating capital into PUMA. adidas's ability to fund a €924m quarterly marketing line and still earn €574m of EBIT while PUMA guides to an annual loss shows where category profit is currently accruing. Scale, product breadth and retailer productivity reinforce brand strength rather than merely accompanying it.

China reinforces the same conclusion. adidas's current local growth and profitability are substantially stronger than Li Ning's latest growth metrics, while ANTA remains a high-margin local competitor. The “Western brands inevitably lose China” thesis no longer fits adidas's current data. The harder question is durability: ANTA's scale, domestic distribution and multi-brand portfolio prevent any assumption that adidas can recover its old position unchallenged.

On valuation, the July selloff did enough to remove exuberance but not enough to create a classical value margin. €164 is around 19–20 times my 2026 EPS estimate and roughly 16 times a reasonable 2027 earnings recovery. That is below adidas's long-run reported P/E center but appropriate for a company entering an event-driven comparison year with inventory rising and a margin target still below the old peak.

My base fair value of €172–€192 requires 2027 revenue around €27.1bn and 9.8% EBIT margin. Neither assumption is heroic. The conservative value of €130–€145 assumes a mild revenue contraction and only 8.5% margin. The optimistic €226–€249 case requires double-digit operating profitability and continued structural share gains. Current price sits close enough to base value that an investor is being paid for successful normalization, but not paid much for the possibility that 2026 was a pulled-forward event peak.

The tariff refund is too small to change that judgment. A full after-tax recovery is worth roughly €1 per share. The market cap moved by billions on July 30. The tariff claim is not the real option. The real one is whether adidas can take €26bn–€28bn of global sales and convert them into a sustainably double-digit margin again.

The twelve-month variable is 2027 guidance. A guide for positive low-single-digit revenue growth with a material EBIT increase would validate the base case because it would prove the World Cup created a higher earnings base rather than merely a higher revenue base. A negative revenue guide combined with marketing still around 12.5–13% would validate the bear case.

The three-year variable is running and footwear. Q2 footwear growth of 1% is the important weakness hidden inside the headline. Apparel can normalize violently after a tournament. adidas needs Adizero, Originals, Terrace successors and other footwear franchises to carry growth once jersey demand fades. If running keeps growing double digits and footwear reaccelerates, the portfolio is structurally stronger. If running slows while On, HOKA and Nike strengthen, the World Cup will have concealed a more fragile product mix.

The five-year variable is whether adidas once again earns the economics of scale. An 11% margin on €30bn revenue produces €3.3bn of EBIT. An 8% margin on the same revenue produces €2.4bn. Almost the entire long-run valuation debate sits inside those three percentage points. Marketing, wholesale economics, store productivity and full-price sell-through decide which version exists.

Bull reasons.

• H1 2026 currency-neutral revenue grew 14%, with DTC +23%, Greater China +16% and Performance strongly accelerating, showing the recovery is broader than one lifestyle franchise.
• Gross margin has recovered from 47.5% in 2023 to 51.6% in 2025 and 52.5% in Q2 2026, direct evidence that discounting and product mix have improved materially.
• 2014 and 2018 World Cup cycles did not produce next-year revenue give-backs; 2019 revenue and operating margin both rose after elevated 2018 tournament marketing.
• adidas is currently taking distribution and consumer share while Nike is repairing its business and PUMA is contracting, giving Gulden a window to entrench shelf space.
• At about 16 times a plausible 2027 EPS, the post-selloff valuation no longer requires a return to the 2019 peak multiple.

Bear reasons.

• Management raised revenue guidance but left EBIT at €2.3bn, implying materially weaker incremental margins than investors expected and an H2 margin around 7.6–7.8% in my reported-revenue range.
• Q2 footwear grew only 1% while the spectacular 35% apparel growth was heavily exposed to World Cup demand, creating a difficult 2027 product-mix comparison.
• Inventory rose 13% and operating working capital increased to 24.0% of sales, raising the cost of being wrong if event demand fades faster than planned.
• On's 64.2% gross margin and rapid running growth show that adidas has not monopolized premium performance economics; specialist brands can take high-value consumers despite adidas's scale.
• At €164, the stock trades above the €130–€145 conservative fair-value case, so downside protection depends on continued earnings growth rather than valuation alone.

Pre-mortem. One credible path to a 50% loss starts in spring 2027. World Cup apparel falls harder than expected, the next Originals cycle fails to replace Terrace/Samba momentum, and running growth drops below 5% as On, HOKA and a recovering Nike take premium shelf space. FY2027 sales fall about 5% rather than my base +2%; excess inventory forces gross margin back toward 49%; management keeps marketing around 12.5% of sales to defend share; operating margin falls to 6.5%. EPS drops toward €5.5–€6.0. A market that no longer believes in a margin recovery assigns 13–14 times earnings, producing roughly €75–€85 per share, around half today's price.

A second path does not require outright brand failure. Revenue holds around €26bn–€27bn, but U.S. tariff costs return in a different legal form, the expected refund is delayed, the euro stays strong, and management keeps investment intensity structurally high. Gross margin remains near 51%, yet EBIT margin stalls around 7–8%. EPS settles near €6.5–€7.0 and the multiple falls to 14–15 times because adidas is reclassified as a mature, low-growth discretionary brand. That produces roughly €90–€105 per share, a 35–45% drawdown even without a collapse in sales.

Research uncertainties are material in five areas. adidas does not disclose product-level profitability or channel-level gross margins, limiting precision on DTC economics. It does not publish a global full-price sell-through percentage or markdown depth, so gross margin and inventory must proxy for pricing power. The €1.5bn World Cup-sales figure is media-reported and cannot be decomposed into incremental versus baseline football sales. The maintenance-versus-growth capex split is not disclosed and is estimated here. Finally, I did not locate a sufficiently authoritative archived primary filing confirming the precise 1995 IPO issue price and capital raised; the current company archive confirms the November 17, 1995 IPO date but not those historical offering terms.

The principal source hierarchy for this work is adidas's July 30, 2026 Q2/H1 release and interim report; the 2025 annual report and ten-year financial overview; adidas's current sourcing, business-model and share disclosures; company-compiled analyst consensus; official Nike, PUMA, On, Deckers, ANTA and Li Ning results; ECB foreign-exchange data; and contemporaneous Reuters, Financial Times and Wall Street Journal reporting for market-reaction facts that cannot be obtained from company filings.

Final research conclusion. adidas is once again a high-quality operating company by the standards that matter most for a consumer brand: products are selling, gross margin is healthy, wholesale partners want more inventory, DTC is growing, China has recovered, and the business has enough balance-sheet capacity to invest through a major sporting event. The Q2 share-price collapse does not overturn those facts. It exposed the next bottleneck. Investors had priced a faster conversion of brand heat into EBIT than management intends to deliver.

I think the market overreacted to the quarterly accounting optics but correctly repriced the longer margin path. The €212m year-on-year marketing increase is substantially more informative than calling the full €924m a World Cup cost, and prior tournaments support the possibility that the spend will generate benefits beyond the quarter. The unchanged €2.3bn annual EBIT target is still a hard signal: management is consuming more of the revenue upside with investment. At €164.05, the equity already discounts much of the July disappointment and sits inside my acceptable-hold range, but it does not offer the downside protection required for a fresh Buy rating. The clean entry would come either from a materially lower price or from 2027 evidence that event marketing falls while underlying running, footwear and China demand stay healthy.

【Company-profile scores】

• Fundamental quality: high
• Growth: medium
• Moat: strong
• Financial soundness: strong
• Management credibility: high
• Valuation attractiveness: medium
• Risk level: medium
• Suitable investor type: long-term growth / cyclical / event-driven

【Investment rating】

• Rating: Hold
• One-line thesis: Revenue recovery is proven, but €164 already prices meaningful 2027 margin normalization that the unchanged €2.3bn 2026 EBIT guide has not yet proved.
• Current-price classification: acceptable hold
• Whether to wait for a better price: yes. A fresh purchase becomes attractive at €105–€115 if gross margin remains above 50%, inventory does not enter a markdown cycle, and 2027 structural sales do not deteriorate. The opportunity cost is missing a faster-than-expected post-World-Cup margin normalization.
• Target holding horizon: 1–3 years
• Expected annualized return: conservative about -14%; base about +13%; optimistic about +45% over the 12-month scenario horizon, including the current dividend as a simple cash-return proxy.
• Max-loss risk: roughly 50% in the pre-mortem where 2027 revenue contracts, gross margin falls toward 49%, operating margin reaches only about 6.5%, and the P/E compresses to 13–14 times.
• Reassessment triggers: gross margin below 50% for two consecutive quarters; inventory growth exceeding sales growth by more than eight percentage points for two quarters; 2027 marketing/POS remaining above 12.5% of sales after tournament normalization; Performance/Running growth below 5%; or Greater China revenue turning negative.
• Acceptable hold price: €160–€195
• Clearly overvalued price: €270–€290

【Ideal Buy Price】105–115 EUR Basis: 20% below the midpoint of the €130–€145 value implied by the conservative 2027 scenario, preserving protection against a World Cup-demand reversal and slower margin recovery.

【Valuation Range】

• current: 164.05 EUR (close as of 2026-08-07)
• bear (conservative · ideal buy zone): [105, 115]
• base (fair · acceptable hold zone): [160, 195]
• bull (optimistic · above the clearly-overvalued line): [270, 290]

Other tickers mentioned

• NKE.US: global scale leader and the most important benchmark for adidas's wholesale/DTC transition and potential competitive recovery.
• PUM.XETRA: closest German sportswear comparable, currently shrinking while adidas gains distribution and revenue.
• ONON.US: premium-running challenger whose rapid growth and 64.2% gross margin test adidas's technical-performance pricing power.
• DECK.US: owner of HOKA, a focused running challenger and useful benchmark for premium footwear economics.
• 2020.HK: ANTA Sports, the strongest local Chinese scale comparison and prospective 29.06% strategic shareholder in PUMA.
• 2331.HK: Li Ning, a direct China sportswear competitor whose slower 2025 growth contrasts with adidas's current Greater China acceleration.

This report is based on public information and does not constitute investment advice. Markets carry risk; invest with caution.