adidas AG achieved record product sales during the World Cup, but did not deliver the profit performance that the market had anticipated.
On July 30, adidas AG reported its second-quarter results for fiscal year 2026. The company's revenue increased by 13% year-on-year to €6.743 billion, or 14% on a currency-neutral basis, setting a new single-quarter historical high. However, operating profit grew only 5% to €574 million, falling short of the analyst consensus estimate of €623 million, a gap of nearly 8%. Net profit from continuing operations rose 6% to €398 million, also below market expectations. The divergence between revenue and profit became the primary contradiction in this earnings report.
In the second quarter, adidas AG's gross margin improved by 0.8 percentage points year-on-year to 52.5%. Increased full-price sales, a higher share of direct-to-consumer channels, and improvements in product and logistics costs continued to support its underlying profitability. However, these improvements did not offset the substantial increase in World Cup marketing expenses. During the period, adidas AG's marketing and point-of-sale expenses surged 30% year-on-year, increasing by approximately €212 million to €924 million, with the ratio to revenue rising from 12% to 13.7%. As a result, the company's operating profit margin declined from 9.2% in the same period last year to 8.5%.
During this World Cup, adidas AG sponsored 14 participating teams, including Spain and Argentina, and provided the official match ball. The company also launched global marketing campaigns around athletes and entertainment stars such as Lionel Messi and Jude Bellingham. The tournament did drive sales growth. adidas AG disclosed that sales of World Cup-related products reached approximately €1.5 billion, with jersey sales exceeding 17 million units, about four times the volume during the 2022 Qatar World Cup. In the second quarter, adidas AG's apparel revenue grew 35% on a currency-neutral basis, and its professional sports business grew 39%, with football and running as the main drivers, where running business grew by around 30%.
However, the growth structure was not entirely balanced. Footwear revenue grew only 1%, and lifestyle business grew 2%. Classic footwear models like Samba and Gazelle, which previously supported adidas AG's recovery, have entered a plateau phase. The high growth this quarter was more reliant on football jerseys, tournament apparel, and professional sports products, rather than being succeeded by new lifestyle footwear models.
Before the earnings release, investors were not only expecting World Cup-driven sales but also stronger profit elasticity and a more significant full-year upward revision from those high sales. Ultimately, adidas AG raised its full-year currency-neutral revenue growth guidance from "high single digits" to 9%-10%, but maintained its full-year operating profit target of approximately €2.3 billion. This profit target was below the market expectation of around €2.5 billion, implying that the incremental revenue from the World Cup was largely absorbed by marketing expenditures in the short term.
The Chinese market remained one of the more stable regions for adidas AG this quarter. In the second quarter, adidas AG's Greater China revenue grew 15% on a currency-neutral basis, continuing double-digit growth, though slightly decelerating from the 17% growth in the first quarter. In May, adidas AG Greater China Managing Director Colin Currie revealed that approximately 65% of products sold in the Chinese market are currently designed by local teams, and about 95% of procurement is completed in China. The synergy efficiency of adidas AG's China team in design capture, production response, and retail execution is also improving. In June, in response to the "Going to Town for Errands" pattern that went viral on social platforms, the company quickly launched a customized print service, leading to several times the order volume in some offline stores. However, against the backdrop of overall pressure in China's footwear and apparel market, compared to the industry's peak, adidas AG's recovery remains in a "repair and catch-up" phase, with subsequent competition and challenges still present.
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