Record Quarter, Record Crash — I Think Adidas CEO Björn Gulden Made the Right Bet
Adidas AG (ADS, Xetra) delivered record Q2 2026 net sales of €6.74 billion, representing 14% currency-neutral growth driven by approximately 18 million jersey sales during the FIFA World Cup in which both finalists wore Adidas kits — yet the stock collapsed 18.7% on the same day, marking the steepest single-session decline since the company's 1995 Frankfurt listing. The selloff was triggered by EBIT of €574 million missing the €623 million consensus, a surge in marketing and point-of-sale expenditure to €924 million (13.7% of net sales, €212 million above plan), and management's decision to hold the full-year EBIT guidance flat at approximately €2.3 billion despite raising revenue guidance to 9–10% currency-neutral growth. Key positives include a gross margin of 52.5% (up 0.8 percentage points year-over-year), DTC share at 57% with 25% DTC growth, Performance division growth of 39%, Apparel growth of 35%, and an undisclosed $250–300 million in potential tariff refunds not yet incorporated into guidance — alongside JPMorgan's maintained Overweight and €230 price target as of August 1, 2026. Structural uncertainties include whether the elevated marketing spend reflects a one-time World Cup investment or a permanent DTC-driven cost increase, CFO succession risk as Harm Ohlmeyer exits and Birgit Kretschmer formally assumes the role on January 1, 2027, and H2 base effects following the World Cup demand surge. The central argument presented here is that the market's reaction constitutes an overreaction to a one-time event, and that CEO Björn Gulden's aggressive brand investment during the World Cup was strategically justified given the brand's turnaround trajectory, Nike's concurrent revenue stagnation at $46.4 billion flat, and the strength of Adidas's underlying product economics.