Adidas has confirmed its third-quarter results and full-year guidance, signaling that the sneaker maker's recent improvement is more than a one-off accounting boost. The company reported a 37% jump in operating profit and double-digit growth in its running and football categories, reinforcing its earlier decision to raise its outlook.
What's driving the numbers
The confirmation follows an unscheduled update in which Adidas said its operating profit benefited partly from a US tariff refund and higher full-price selling. But the company is also working to keep demand steady as some of its hit retro models, like the Samba and Gazelle, cool off. To do that, it's investing in new performance shoes, including the Adizero Adios Pro Evo 3, and broadening its product lineup.
Performance revenue rose 14% on a currency-neutral basis, with double-digit growth in running, training, and football. Geographically, currency-neutral sales climbed 13% in Greater China and 12% in North America, showing strength in two of the world's biggest markets for athletic wear.
The cost of staying hot
The catch is that this momentum is getting more expensive to defend. Marketing and point-of-sale expenses rose 4% to €833 million, partly tied to World Cup-related spending in July and marketing that "normalized" from August. That highlights how quickly costs can stick even as trends rotate.
For investors, the €833 million marketing bill raises the bar for repeatable profit growth. A 37% jump in operating profit grabs attention, but the bigger question is how durable the margin story is as Adidas spends more to keep shoppers engaged. This kind of spend is hard to dial down quickly, which increases what analysts call "operating leverage." In plain English, if sales hold up, profits can grow fast, but if pricing or volumes soften, profits can fall faster than revenue.
What it means for investors
As Adidas shifts demand from retro best-sellers toward newer performance lines, investors will be watching whether it can keep enough full-price sell-through to justify the higher cost base into the next product cycle. The company's ability to maintain its raised guidance will depend on whether the new performance shoes can replicate the success of the Samba and Gazelle, and whether the broader market for athletic footwear stays strong.
Adidas is not alone in navigating these dynamics. Rivals like Nike are also pushing into new categories, such as Nike's first India-made running shoe, which targets growth beyond China. Meanwhile, other consumer brands are feeling the pinch of shifting demand and rising costs, as seen in Chipotle's value deals lifting sales while costs squeeze profits.
For everyday investors, the key takeaway is that Adidas's growth is real but increasingly costly to maintain. The company's ability to keep raising prices and selling at full price will be crucial. If it can, the higher marketing spend could pay off in stronger profits. If not, the margin story could quickly reverse.
Adidas's confirmation comes at a time when the broader market is watching consumer spending closely, with inflation and interest rates still weighing on household budgets. The company's performance in Greater China and North America will be a key indicator of whether the athletic wear boom has legs, especially as other retailers like Wesfarmers warns Bunnings sales cool as inflation and rates bite.
In the end, Adidas's raised forecast is a vote of confidence in its strategy, but the rising marketing bill is a reminder that staying on top in the sneaker game is never cheap. Investors will be watching the next few quarters to see if the investment pays off.
