- Strong growth in North America and EM
- Second-quarter sales miss expectations
- Company sees €200 million tariff hit
German sportswear giant Adidas (ADS:ETR) delivered sales growth in all regions in the second quarter of 2025 along with an uptick in margins which drove better-than-expected operating profits.
So why were shares in the trainers titan marked down 7% to a one-year low of €184 in Frankfurt on the news?
Well, quarterly sales came in shy of expectations and Adidas also warned higher US tariffs would add around €200 million (£173 million) to its costs in the second half.
Investors were also disappointed as the Gazelle and Samba shoe seller stuck with full-year 2025 profit guidance in the €1.7 billion to €1.8 billion range.
That was below the €2.1 billion called for by consensus, with management warning Adidas’ ‘continued brand momentum’ and ‘strong’ second half order book would be offset by ‘the possible direct and indirect impacts from higher US tariffs’.
GROWTH FALLS SHORT
While second-quarter operating profit of €546 million topped the €523 million analysts were looking for, group revenue grew just 2.2% to €5.95 billion which was light of the €6.15 billion company-compiled consensus.
In its outlook statement, Adidas noted ‘external volatility and macroeconomic risks have been increasing significantly’ since March as it refrained from raising guidance.
Adidas’ revenue growth emanated from all regions in the quarter, with North America, Emerging Markets and Latin America leading the charge and offsetting slower growth in Europe and China.
HEARING FROM BJORN AGAIN
Chief executive Bjorn Gulden explained: ‘The year has started great for us and normally we would now be very bullish in our outlook for the full year. We feel the volatility and uncertainty in the world does not make this prudent. We still do not know what the final tariffs in the US will be.’
He added: ‘We have already had a negative impact in the double-digit euro millions in Q2 and the latest indications of tariffs will directly increase the cost of our products for the US with up to €200 million during the rest of the year. We do also not know what the indirect impact on consumer demand will be should all these tariffs cause major inflation.’
POSITIVE FOR JD?
Shore Capital said Adidas’ second-quarter results painted ‘a positive picture of the group’s performance, with strong revenue growth to €5.95 billion and good margin performance from the brand. While the correlation with JD Sports’ (JD.) sales is not as strong as with Nike (NKE:NYSE), Adidas is still a significant brand partner with which JD has a number of exclusive products.’
JD Sports shares dropped 2% to 87.2p early doors in London, yet Shore Capital said the growth being delivered by Adidas ‘gives us more confidence in the strength of the athleisure market and in JD’s prospects for a revenue turnaround.’
The strong performance from Adidas contrasted with that of rival Puma (PUM:ETR), which recently reported weaker trading with second quarter sales down 2% to €1.9 billion leading to a reduced outlook for the business.
‘A smaller brand for JD than Adidas, these weaker results from Puma nonetheless reflect the uncertainty in the global consumer sector and the need for continued caution,’ added Shore Capital.
