Adidas Stock Plunges Over 17% as Profit Miss Overshadows Record Revenue

Adidas (ADSGn) shares plunged as much as 17.1% on Tuesday, marking the stock's most significant single-day drop in over six years. The sharp sell-off occurred despite the company reporting record second-quarter revenue, as a substantial miss on operating profit and a cautious full-year outlook disappointed investor expectations.

Profit Disappoints Amid Record Sales

The German sportswear maker announced that its second-quarter net sales surged to a record €6.74 billion, driven by strong performance in its running and football categories and a 19% sales increase in China. Buoyed by this top-line strength, Adidas raised its full-year currency-adjusted revenue growth forecast to a range of 9% to 10%, up from a prior "high single-digit" outlook.

However, the company's operating profit for the quarter rose just 5% to €574 million, falling well short of analyst consensus estimates, which were in the €615 million to €623 million range, according to Investing.com. The primary driver of the profit miss was a roughly 30% year-over-year increase in marketing expenditure, an investment aimed at capitalizing on the 2026 FIFA World Cup.

Cautious Outlook and Management Change

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Compounding investor concerns, Adidas left its full-year operating profit target unchanged at approximately €2.3 billion. The market had anticipated an upward revision in line with the stronger revenue forecast, with analysts having modeled a figure closer to €2.4 billion. The decision to maintain the profit guidance signaled to investors that higher costs and marketing spending would continue to weigh on margins.

Adding to the uncertainty, the company announced that its long-serving Chief Financial Officer, Harm Ohlmeyer, will not renew his contract after nearly three decades with Adidas. Birgit Kretschmer is slated to take over the role by the end of 2026, introducing a layer of management transition during a challenging period.

Market Reaction

The market's severe reaction reflects that investors had already priced in a strong revenue beat and were expecting a corresponding profit upgrade. The combination of compressed margins, a static profit outlook, and the departure of a key executive proved more than enough to overwhelm the positive sales news. The stock's collapse was a significant drag on Germany's DAX index, while shares of competitor Puma also declined.