What's Happening?
Adidas has announced a significant increase in its sales, with revenues growing 7% on a constant currency basis to €7.3 billion in the third quarter of 2026. This marks another quarterly high for the company, with operating profit climbing 37% to €1 billion.
The growth was primarily led by apparel, which saw a 19% increase, followed by accessories at 5%. Footwear sales remained flat during this period. Geographically, Japan and South Korea experienced the strongest growth at 19%, followed by Latin America (16%), 'emerging markets' (15%), Greater China (13%), and North America (12%). Europe was the only region to see a decline, with sales down 4%, attributed to footwear discounting and a streamlined distribution approach. This earnings call was the last for outgoing CFO Harm Ohlmeyer, who will be succeeded by Birgit Kretschmer.
Why It's Important?
This strong performance by Adidas, particularly in apparel and performance sports, indicates a shifting consumer preference within the athletic wear market. The flat footwear sales, despite previous success with lifestyle models like Samba and Spezial, suggest that while fashion-led ranges are still important, there's a renewed focus on core athletic products. The significant growth in North America, a key market, underscores the brand's continued relevance and market penetration. The company's ability to achieve record sales and operating profit amidst varying regional performances highlights its strategic adaptability and brand strength. This success could influence competitors to re-evaluate their product strategies, potentially leading to increased investment in performance wear and diversified apparel lines to capture evolving consumer demands.
What's Next?
Following its strong third-quarter results, Adidas has updated its full-year guidance for 2026, now predicting a 9-10% revenue growth. The company also anticipates increased profitability, expecting to generate €100 million more in operating profit than previously projected. With an additional €200 million tariff refund, Adidas forecasts its operating profit to reach €2.5 billion, up from its earlier estimate of €2.3 billion. CEO Björn Gulden plans to continue pushing fashion-led ranges while maintaining momentum in the athlete space by signing more teams, players, and events to market products. The company also aims to continue localizing supply chains and targeting product inventory to ensure speedy deliveries and prevent unwanted stock. The transition of CFO from Harm Ohlmeyer to Birgit Kretschmer will also be a key development to watch in the coming year.
Beyond the Headlines
The shift in Adidas's sales drivers, from lifestyle footwear to apparel and performance sports, reflects a broader trend in the fashion and athletic industries where consumers are increasingly seeking functional and performance-oriented products. This could signal a move away from purely trend-driven purchases towards items that offer both style and utility. The company's strategy of balancing designer-led and trend-driven apparel with a strong focus on athletic performance suggests a nuanced approach to market demands. This dual focus allows Adidas to cater to a wider range of consumers, from fashion-conscious individuals to dedicated athletes. The emphasis on localized supply chains also highlights a growing industry trend towards greater efficiency and responsiveness to regional market needs, potentially reducing lead times and inventory risks.
