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Adidas (ADS) Stock Plunges 8% Following Disappointing 2026 Profit Forecast
TLDR
- Adidas projected 2026 operating profit of €2.3 billion, falling short of the €2.72 billion analyst consensus estimate
- The sportswear giant faces approximately €400 million in combined pressures from U.S. tariffs and foreign exchange challenges
- Shares declined approximately 7–8% during Frankfurt trading session after the guidance release
- 2025 fiscal year performance was robust — operating profit surged 54% to €2.06 billion alongside record-breaking revenue of €24.8 billion
- Bjorn Gulden’s tenure as CEO was extended until 2030, while the company announced plans to raise dividends by 40% to €2.80 per share
Adidas posted impressive 2025 numbers, but the market’s focus has shifted forward — and the outlook has left shareholders disappointed.
The German athletic apparel giant announced record annual revenue of €24.8 billion, representing approximately 5% growth, while net income jumped 75% to reach €1.34 billion. Operating profit climbed 54% to €2.06 billion, significantly exceeding the company’s initial guidance range of €1.7–1.8 billion from the beginning of last year.
When adjusted for currency fluctuations, revenue expanded 13%, with double-digit percentage increases recorded across every market and distribution channel. The company’s gross margin strengthened by 0.8 percentage points, reaching 51.6%.
The fourth quarter also demonstrated strength. Currency-neutral revenue increased 11% to €6.1 billion, with the direct-to-consumer segment posting double-digit growth throughout all geographic regions. Gross margin expanded by 1 percentage point to 50.8%, while operating profit more than doubled, hitting €164 million.
So what triggered the 7–8% share price decline?
The answer lies in forward guidance. Adidas projected 2026 operating profit at approximately €2.3 billion — substantially below the Visible Alpha analyst consensus estimate of €2.72 billion. RBC Capital Markets analyst Piral Dadhania characterized this as suggesting a 15% consensus earnings reduction “at face value.”
Tariffs and Currency Take a Bite
The company identified a combined €400 million challenge stemming from U.S. tariff policies and adverse foreign exchange fluctuations. Adidas produces a significant portion of its merchandise in Asian nations now facing U.S. import duties, creating greater exposure compared to certain competitors. Additionally, a strengthening euro relative to the dollar has diminished the value of international earnings.
Deutsche Bank characterized the guidance for operating income and profit margins as “slightly weaker-than-expected.”
The implied operating margin for 2026 — approximately 8.5–8.8% — would fall short of Adidas’s own 10% medium-term objective, according to RBC’s analysis.
Regarding revenue, Adidas forecasted currency-neutral growth in the high-single-digit percentage range for 2026, representing roughly €2 billion in additional sales. North America and Greater China are anticipated to drive growth, with low-double-digit percentage expansion projected for both markets.
Mid-Term Outlook Offers Some Comfort
Adidas also unveiled a multi-year strategic plan, projecting high-single-digit revenue growth and mid-teens operating profit compound annual growth rate (CAGR) spanning 2026–2028.
Morgan Stanley observed that this type of medium-term guidance is “relatively rare” and indicated it serves to “soften the blow” of the near-term shortfall. With shares trading at approximately 13x 2026 earnings when results were announced, the investment bank adopted a more constructive perspective on the broader trajectory.
The company also proposed raising its dividend by 40% to €2.80 per share — signaling confidence in cash flow generation despite near-term challenges.
CEO Bjorn Gulden’s contract received an extension through 2030. RBC described this as “reassuring,” highlighting his comprehensive knowledge of the sports industry. Gulden, who assumed leadership in 2023 following the controversy surrounding the Ye collaboration, has consistently exceeded the guidance targets he established at the beginning of each fiscal year.
Adidas also revealed intentions to appoint Nassef Sawiris as chairman.
