Adidas AG (ADDYY) Q1 2026 Earnings Call Transcript
Bullish Apparel - Footwear & Accessories 67.74B Germany
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Adidas delivered 2025 growth with €2.056b EBIT and improving margins; 2026 guidance remains high-single-digit local-currency growth with ongoing cost leverage and a €2.3b EBIT target, supported by a €1b buyback and stronger brand/product momentum.
⭐ Key Highlights
Adidas 2025 performance strong
Adidas delivered currency-neutral adidas brand growth of 13% in 2025 and an EBIT of €2.056b, up 54% year over year, with gross margins near all-time highs (≈51.6% base).
Balanced growth across regions and categories
Strong performance across major regions (NA +10%, Europe +10%, Greater China +13%, Japan/Korea +14%, LatAm +22%), with footwear leading the mix (58%), apparel accelerating to 15% and performance remaining the growth driver.
Strategic shift to local decision-making
Bjorn Gulden emphasized closer-to-consumer decision-making, more local autonomy in markets, and a broader product/apparel mix to reduce dependence on any single franchise.
Brand and product momentum in running/football
Running and football performance product pipelines are strong, with Adizero, Evo SL, and Hyperboost in development; football regained leadership position and All-Star visibility reinforced brand heat.
Financial discipline and capital allocation
Gross margins improved due to product cost savings and disciplined pricing; operating overheads declined to 31.4% (from 34.2%), and the company announced a €1.0b share buyback cap for 2026 plus a €2.80 dividend per share, with an aim to return ~€1.5b to shareholders in 2026.
Guidance and medium-term targets
Guidance remains high-single-digit local-currency growth for 2026 with ~€2.3b EBIT target (subject to FX and tariffs), plus a path to >€2b annual top-line growth and mid-teens EBIT CAGR through 2028, aided by cost leverage and scale.
✔Positive Signals
- 13% currency-neutral adidas brand growth in 2025
- EBIT €2.056b, up 54% YoY, with margin resilience
- Strong regional performance (NA, Europe, Greater China, LatAm)
- Significant buyback authorization and dividend increase (€2.80 per share)
- Progress in product pipeline across running, football, and apparel
✖Negative Signals
- Tariffs and FX headwinds persisting into 2026
- Q4 hyperinflation effects (Argentina, Turkey) impacting reported margins
- US market still not at target; need to accelerate U.S. performance
- Potential macro volatility linked to Middle East tensions affecting logistics
- Longer-term margin visibility hindered by external macro factors
📊Financial Results
- Full-year 2025 adidas brand growth: 13% currency neutral; reported 10% growth; EBIT €2.056b, up 54% YoY
- Q4 gross margin near all-time high at ~51% with YEEZY impact excluded
- Full-year gross margin improved vs. 2024; price discipline and improved mix contributed to margin resilience
- Inventories increased 70% YoY (currency neutral 23%), driven by preparation for top-line growth and World Cup in 2026; end-year inventory is positioned to improve in H1 2026
- Net leverage at 1.4x; dividend increased and €1b buyback authorized for 2026
🔮Future Guidance
- Guidance for 2026: high-single-digit growth in local currencies and ~€2.3b EBIT (before tariff/FX effects and potential upside from operating leverage)
- Top-line aspiration of ~€2b annual growth in subsequent years with leverage from cost optimization and scale
- Tariffs and FX pose headwinds in 2026; improvements expected in 2027 driven by currency benefits and ongoing margin management
- Capex and store investments focused on consumer-facing areas (retail upgrades, IT/S/4HANA, DCs) to support growth
- Potential share buybacks up to €1b annually; Innovation Day planned for Sep 23–24 to showcase pipeline
💡Interesting Insights
- Management stresses local-market decision rights and near-consumer execution as essential to achieving EUR 25–40b targets, signaling a pivot from centralized control to market-specific agility
Detailed Analysis
AI-generated summary of Adidas AG earnings call transcript.
In 2025 Adidas restored brand heat and achieved currency-neutral growth of 13% for the adidas brand, a €2.056b EBIT, and a near-52% gross-margin trajectory aided by disciplined pricing and improved mix. Regions delivered solid growth, with Greater China, LatAm, and running-related categories contributing meaningfully, while the company shifted toward more localized decision-making and a broader product/apparel portfolio to sustain multi-franchise momentum. The President/CEO highlighted innovations in foam technology (Hyperboost), running platforms (Adizero/Evo SL), and performance-at-scale merchandising, alongside high-profile collaborations and sport sponsorships that boosted brand visibility. On the cost side, operating overhead leveraged down to about 31.4%, and a €1b share buyback was approved for 2026 with a €2.80 per-share dividend, signaling strong capital allocation. The 2026 guidance contemplates high-single-digit growth in local currencies and an EBIT around €2.3b, with expectations of continued margin resilience and further top-line expansion into 2027–2028, contingent on FX and tariff dynamics. Management also signaled ongoing investments in store refurbishments, IT upgrades, and a broadened direct-to-consumer footprint to sustain growth.
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