adidas: a first billion-euro quarterly operating profit — a fifth of it will not come again, and the shoe stands still

There is one investor weakness that catches you precisely at the companies you believe you know best: the wardrobe trap. If two pairs of shoes with three stripes are standing in your hallway, you no longer examine the company behind them as strictly as some unfamiliar name from the small-cap list. You know the stuff is good. You see the jerseys in the stadium, the ads in your feed, the store on the high street — and your brain quietly converts all of that into a statement about a balance sheet. So let us make a deal: we keep the wardrobe closed and read the 2025 annual report (signed February 19, 2026), the 2026 half-year report of July 30, 2026 and the third-quarter earnings release of October 29, 2026. There is plenty in there to admire — and four or five places where you stop for a moment.

The tension in this analysis fits into one sentence: adidas is selling and earning more than at any point in its history — but the growth comes from apparel rather than from the shoe, and a fifth of the third quarter's record profit rests on a one-off tariff refund. Both halves are documented, both are explainable, and both belong together.

The third quarter of 2026: a record with a one-off

This analysis first appeared on August 5, 2026 and left three questions open at the time: whether footwear grows again, whether the capital tied up in inventory returns to the company's own target range, and how much of the momentum survives the football World Cup. On October 20, 2026 adidas published preliminary third-quarter figures in an ad-hoc release; the full earnings release followed on October 29. The headline numbers are impressive: third-quarter revenue rose 9 percent to EUR 7,252 million (7 percent currency-neutral), operating profit 37 percent to EUR 1,008 million — the first time above one billion in a single quarter. The operating margin climbed from 11.1 to 13.9 percent, earnings per share from continuing operations from EUR 2.57 to EUR 4.06. Chief executive Bjørn Gulden sums it up in the release:

"We achieved the highest revenue ever in a quarter with € 7,252 million and the highest operating profit ever with € 1,008 million."

— Bjørn Gulden, CEO, adidas AG third-quarter 2026 earnings release, October 29, 2026

And now the sentence that sits two paragraphs further down in the same release and has to be read next to the record figure:

"During the quarter, adidas received the majority of its US tariff claims. The company recorded a corresponding refund of around € 200 million, which contributed to the gross margin improvement."

— adidas AG, third-quarter 2026 earnings release, gross margin section

Those EUR 200 million are money adidas had previously paid to US customs and got back after filing refund claims. It is real money — but it does not come again. Strip it out as a test: EUR 1,008 million of operating profit becomes about EUR 808 million, and the 13.9 percent operating margin becomes about 11.1 percent — exactly the prior-year quarter's figure (EUR 736 million on EUR 6,630 million of revenue). The gross margin would be about 51.6 percent instead of 54.3, slightly below last year's 51.8 percent. That is our calculation, not the company's; adidas names the roughly EUR 200 million but does not report an adjusted margin. In everyday terms: the store had a good quarter — and on top of that a tax rebate landed in the mailbox.

The other side is fair too: without the tariff refund operating profit would still have risen by about 10 percent, and five of six regions grew at double-digit rates — Greater China up 13, North America up 12, Emerging Markets up 15, Latin America up 16 and Japan/South Korea up 19 percent (all currency-neutral). Direct-to-consumer grew 17 percent. Marketing spend normalized after the World Cup as announced: up 4 percent to EUR 833 million, 11.5 percent of revenue after 13.7 percent in the second quarter.

The only region in the red was Europe: down 4 percent to EUR 2,236 million. adidas gives two reasons: a deliberately cautious sell-in to retailers in a market full of discounts, and an SAP system migration in parts of Europe that pushed deliveries from the end of the quarter into the fourth quarter. For the fourth quarter the company expects high-single-digit growth in Europe again.

The new guidance — and what it is made of. adidas now expects 2026 operating profit of around EUR 2.5 billion instead of around EUR 2.3 billion, with currency-neutral revenue growth unchanged at 9 to 10 percent. The earnings release lays out the bridge: around EUR 100 million more from the ongoing business, around EUR 200 million from the tariff refund, minus around EUR 100 million that adidas is putting into projects for future cost efficiency in the fourth quarter. Strip out the one-off refund and you are back at around EUR 2.3 billion — the previous guidance. That leaves roughly EUR 210 million of operating profit for the fourth quarter (EUR 2.5 billion minus EUR 2,287 million after nine months), after EUR 164 million in the prior-year quarter. For 2027 management reiterated in the investor call presentation high-single-digit revenue growth and an operating margin of around 10 percent, and more than 10 percent for 2028.

A verbatim transcript of the analyst call of October 29, 2026 was not available to us at our editorial cut-off. We evaluated the company's call presentation, the earnings release, the fact sheet and the financial supplement instead. The presentation sums up lifestyle footwear on a slide of its own: "The lifestyle footwear market is currently difficult — no reason to panic … it will normalize" (slide text, capitalization adjusted). What that means for the core business is covered further down in the first uncomfortable truth.

What adidas actually does

adidas AG, headquartered in Herzogenaurach, traces back to 1949, when the "Adolf Dassler adidas Sportschuhfabrik" was entered in the commercial register. The business model has stayed remarkably plain: adidas designs athletic footwear, apparel and accessories, has them manufactured and sells them — either to retailers (wholesale) or straight to you (direct-to-consumer, meaning its own stores and its own online shop). On top of that the company buys visibility: contracts with federations, clubs, leagues and individual athletes.

Three product divisions split the revenue: footwear (2025: EUR 14,232 million), apparel (EUR 8,764 million) and accessories (EUR 1,815 million). Regionally adidas reports in six segments: Europe, North America, Greater China, Emerging Markets, Latin America and Japan/South Korea. At the end of 2025 the group employed 64,938 people; by mid-2026 the figure was 64,394.

One point you have to know, because it distorts every multi-year comparison: until 2024 adidas was still selling down the remaining inventory of the discontinued Yeezy line. The 2025 annual report is explicit that this ended with the 2024 sell-through — 2025 contained no Yeezy revenue at all, against roughly EUR 650 million of revenue and around EUR 200 million of operating profit in the prior year. So anyone comparing growth rates has to know whether the prior-year base includes Yeezy. adidas discloses both; below we always name which base is meant.

Why there is no US-style filing here — and where the numbers come from instead

One note up front, because it shapes the entire evidence chain: adidas files no annual report on Form 10-K and no quarterly report on Form 10-Q. It is not a US reporting company. Mandatory reporting runs through the regulated market (Prime Standard) of the Frankfurt Stock Exchange: audited IFRS consolidated accounts, a half-year financial report, quarterly statements and ad-hoc releases under Article 17 of the EU Market Abuse Regulation.

What confuses people is that the stock does exist in America. Traded in the United States is a depositary receipt on the adidas share — an American Depositary Receipt under the symbol ADDYY, over the counter on the OTCQX International Premier tier. adidas describes it as a "sponsored Level I ADR Program" run by Deutsche Bank Trust Company Americas, with a ratio of two receipts per share. A Level I program is the simplest tier — and it explicitly triggers no reporting duty toward the Securities and Exchange Commission. Search EDGAR for adidas numbers and you find nothing, and that is not a warning sign but the ordinary consequence of the structure.

Every figure in this analysis therefore carries "Source: fundamental data & company reports (annual/half-year report, quarterly statements, Frankfurt Stock Exchange)". You know the same constellation from our Rheinmetall analysis — another DAX name without an SEC registration, where the whole evidence chain runs through the company's own reports.

And a word on currency of information: this analysis was first published on August 5, 2026 and updated on October 30, 2026. The most recent periodic report is now the earnings release for the third quarter and first nine months of 2026, dated October 29, 2026, together with the fact sheet, the financial supplement and the investor call presentation of the same day. It was preceded on October 20, 2026 by an ad-hoc release with preliminary quarterly figures and the raised profit guidance. In between sit mandatory disclosures of share purchases by executive board members in September; they are in the valuation chapter. The next report is the 2026 annual report; the financial calendar does not give a date yet, and last year's report came out on March 4.

How this stock reached our desk

Honestly: not through a scanner hit, but through an attention ranking. On August 5, 2026 adidas sat near the top of the most-discussed lists in the wallstreet-online forum — that is, where retail investors were talking loudest about a stock right then. That is an attention signal and explicitly not a reason to buy. A stock lands on such lists when a lot is being written about it; that can be enthusiasm, annoyance, hope or simply habit.

Even so, a list like that is useful to us — as a topic radar. When a great many people talk about a stock at once, the sober look into the primary reports pays off precisely because the details drown in the noise. Those details are what we pull out now.

The numbers over the years — fairly credited

First the genuinely impressive part, and there is a lot of it. adidas is climbing out of a deep hole. The operating margin — the share of revenue left as operating profit after all running costs — stood at 9.4 percent in 2021, collapsed to 3.0 percent in 2022 and fell to 1.3 percent in 2023. Out of every EUR 100 of revenue, EUR 1.30 was left. In 2024 it was 5.6 percent, and in 2025 8.3 percent again. Operating profit rose 54 percent to EUR 2,056 million in 2025 (prior year EUR 1,337 million), even though roughly EUR 200 million of the prior-year figure had come from the Yeezy sell-through.

Revenue reached a record EUR 24,811 million in 2025 (prior year EUR 23,683 million): up 5 percent in euro terms, up 10 percent currency-neutral and up 13 percent currency-neutral for the adidas brand alone, that is, stripping the Yeezy effect out of the prior-year base. The gross margin — what is left after the pure cost of goods — improved 0.8 percentage points to 51.6 percent. Net income from continuing operations rose from EUR 824 million to EUR 1,377 million, earnings per share from EUR 4.24 to EUR 7.46. The dividend for 2025 was raised from EUR 2.00 to EUR 2.80 per share, approved at the annual general meeting on May 7, 2026.

The balance sheet also looks healthier than three years ago. Equity rose 5 percent to EUR 5,776 million in 2025 and the equity ratio from 26.5 to 28.5 percent. Leverage — adjusted net borrowings divided by operating profit before depreciation and amortization (EBITDA) — improved from 1.5 to 1.4; in 2023 it was still 3.3. In everyday terms: the debt pile now equals a good one year of earnings instead of a good three. That is real progress.

And 2026 has kept going. First-quarter revenue rose 14 percent currency-neutral to EUR 6.6 billion, operating profit 16 percent to EUR 705 million, the operating margin to 10.7 percent. The second quarter then delivered a record that the third quarter has already beaten: EUR 6,743 million of revenue, up 13 percent in euro terms and 14 percent currency-neutral. The half-year adds up to EUR 13,335 million of revenue and EUR 1,279 million of operating profit. adidas raised its full-year guidance on July 30, 2026 accordingly: currency-neutral revenue is now expected to grow 9 to 10 percent in 2026 instead of "at a high-single-digit rate". After nine months the books show EUR 20,587 million of revenue (up 10 percent in euro terms, 11 percent currency-neutral) and EUR 2,287 million of operating profit (up 21 percent) — already more than in all of 2025.

So much for the success story, and it is largely deserved. Now comes the part the applause covers up.

What the reports say — the uncomfortable truths

Uncomfortable truth no. 1: the shoe stands still — even after the World Cup

adidas was founded as a shoe company, and footwear is still the largest business: in the second quarter of 2026, EUR 3,492 of the EUR 6,743 million of revenue, or 52 percent. And that is precisely the division that barely grew in the World Cup quarter, the record at the time. The company said it in one sentence at the time:

"Footwear revenues were up 1%."

— adidas AG, Second Quarter 2026 Results, published July 30, 2026 (currency-neutral; in euro terms adidas reports 0 percent)

In euro terms footwear revenue rose from EUR 3,476 million to EUR 3,492 million — EUR 16 million, or 0.5 percent. In the same quarter apparel added 34 percent to EUR 2,721 million and accessories 18 percent to EUR 530 million. All of the second quarter's growth therefore came from textiles and add-ons.

Why? adidas gives two reasons, and both are credible. First, performance footwear is doing well: the chief executive names football, running and training as the drivers, and the earnings release explicitly reports double-digit growth in running and training footwear. Second, lifestyle footwear is under pressure: the company describes a market marked by heavy discounting, especially in Europe, and adidas deliberately chose not to load the trade in order to protect its own price points. That is a defensible decision — it simply does not change the fact that the division carrying more than half the business stood still in what was then the record quarter of the World Cup. For the whole first half of 2026 footwear revenue is up 2 percent currency-neutral against 33 percent for apparel.

The third quarter did not turn the picture; it confirmed it. Footwear revenue came to EUR 3,827 million after EUR 3,751 million a year earlier — up 2 percent in euro terms, flat currency-neutral. Apparel grew 19 percent currency-neutral to EUR 2,898 million. After nine months footwear stands at plus 1 percent, apparel at plus 28 percent. And footwear is still more than half of the business: 53 percent of quarterly revenue. Gulden himself writes in the earnings release where the problem lies:

"Yes, the footwear lifestyle business is currently challenging, mainly due to too much inventory and too much discounting in the marketplace, but we know this will soon normalize again."

— Bjørn Gulden, CEO, adidas AG third-quarter 2026 earnings release, October 29, 2026

There is a bright spot in the small print: through its own stores and online shop, footwear grew 6 percent in the third quarter, carried by double-digit gains in running and training. So consumers are buying — adidas is just deliberately shipping less to retailers whose stockrooms are still full. Whether the "soon" in Gulden's sentence means the fourth quarter, the release does not say.

Rule of thumb: a record top line tells you how much was sold. It does not tell you whether the core business is still growing.

Uncomfortable truth no. 2: the World Cup record in the second quarter was bought expensively

The second quarter of 2026 was the quarter of the football World Cup, and adidas used it: by the company's own count its campaign drew more than 9 billion views and over 400 million interactions — according to adidas the most successful campaign in the brand's history. That has a price, and the price is in the earnings release: marketing and point-of-sale expenses rose 30 percent, or EUR 212 million, to EUR 924 million, and their share of revenue went from 12.0 to 13.7 percent. On top came 12 percent higher operating overheads, mostly shipping and staff for the growing direct business.

The result of that arithmetic: revenue up 14 percent, operating profit up only 5 percent to EUR 574 million — and the operating margin down from 9.2 to 8.5 percent. In everyday terms: the store was fuller than ever, but every hundred-euro note left EUR 8.50 behind instead of EUR 9.20.

In fairness: advertising does not only work in the quarter it is paid for. And the gross margin, the measure of pricing quality, actually improved by 0.8 percentage points to 52.5 percent in the second quarter — adidas is selling more at full price. Still the sober finding stands: the tournament is over, the costs were exceptionally high once, and the decisive question is how much of the momentum survives without one.

The first answer came with the nine-month figures on October 29, 2026, and it is mixed. Marketing spend normalized as announced (11.5 percent of revenue in the third quarter), but growth slowed from 14 to 7 percent currency-neutral. After nine months marketing spend stands at EUR 2,513 million, or 12.2 percent of revenue; for the full year adidas is aiming for a ratio below last year's 12.4 percent.

Uncomfortable truth no. 3: profit and cash ran against each other at adidas — until the third quarter

When this analysis first appeared, this was its heart, and it has partly resolved since — so first the story, then the new state of play. Operationally 2025 was the best year in a long time — and the year in which the least money came in. The annual report says so without hedging:

"Net cash generated from operating activities amounted to € 751 million in 2025 (2024: € 2,910 million). This development was mainly due to operating working capital investments that offset the higher operating profit in the period."

— adidas AG, Annual Report 2025, "Liquidity analysis", p. 90

What is working capital? Picture a store. Working capital is everything standing between you and your money: the goods on the shelf and in the warehouse (inventories), plus what customers still owe you (receivables), minus what you still owe your suppliers (payables). When that number grows faster than sales it means you are earning on paper while your money sits in boxes.

That is exactly what happened up to mid-year. By June 30, 2026 inventories were up 13 percent to EUR 5,969 million and operating working capital up 18 percent to EUR 6,661 million — against a 10 percent rise in euro-denominated revenue. On average working capital equalled 24.0 percent of sales, after 20.7 percent a year earlier. adidas explains it openly:

"This development reflects the company's decision to prioritize availability of the brand's products, particularly related to the World Cup, over short-term inventory optimization."

— adidas AG, Second Quarter 2026 Results and Half-Year Report 2026, both published July 30, 2026

That is understandable: if you want to be in stock for the tournament, you have to have the goods made beforehand. What is notable, though, is that adidas is now above its own target. In the outlook of the 2025 annual report the company guided to average working capital of 22 to 23 percent of sales for 2026 — and explicitly confirmed that range in the half-year report even though the half-year figure already stood at 24.0 percent. Either the second half brings the reduction, or the target wobbles.

The series shows this is not a new question. The ten-year overview in the 2025 annual report reports average operating working capital as a percentage of net sales at 20.0 percent (2021), 24.0 percent (2022), 25.7 percent (2023), 19.7 percent (2024) and 23.0 percent (2025); in the first half of 2026 it was 24.0 percent. And for 2025 the annual report already concedes that the figure came in "above the guidance of between 21% and 22%". The 2026 target is therefore the second in a row that adidas itself has flagged as demanding.

Fairness demands the counter-movement too: in the first half of 2026 operating activities brought in EUR 644 million, after EUR 916 million had flowed out in the prior-year half. So the trend has turned. Even so, EUR 644 million of cash stood against EUR 1,279 million of operating profit: roughly half of the reported success had not arrived as money in the half-year.

The new state of play as of September 30, 2026: in the third quarter the cash arrived. After nine months the cash flow statement shows EUR 1,971 million generated from operating activities — after an outflow of EUR 275 million a year earlier, and more than two and a half times the whole of 2025. The third quarter alone accounts for EUR 1,327 million by arithmetic. Against nine-month operating profit of EUR 2,287 million that is 86 percent. Inventories fell 4 percent from June 30 to EUR 5,739 million; adidas says the goods pulled forward for the World Cup were successfully converted into revenue. That puts inventories below the EUR 5.8 billion mark that CFO Harm Ohlmeyer had named for year-end on the analyst call for the 2025 annual report on March 4, 2026 (third-party transcript; adidas publishes no verbatim record) — already at quarter-end.

The point is not fully settled, though. Inventories are still 5 percent above last year, operating working capital rose 8 percent to EUR 6,682 million, and the average of the last four quarters, at 23.9 percent of sales, is still above the 22 to 23 percent range adidas set for 2026 in its annual report — the third-quarter release does not repeat that range. And part of the cash inflow is the tariff refund itself. Rule of thumb: profit is an opinion, cash flow is a fact — at adidas, though, a fact you should never read off a single reporting date.

Uncomfortable truth no. 4: 92 percent of production sits in Asia — and customs does the maths too

adidas owns virtually no factory. The annual report puts it plainly: "we outsource almost 100% of our production to independent manufacturing partners with the vast majority located in Asia." And there the whole thing concentrates in a handful of countries:

"In 2025, Vietnam remained the largest sourcing country, accounting for 27% of adidas' total volume (2024: 27%), followed by Indonesia at 18% (2024: 19%) and China at 16% (2024: 16%). Overall, 92% of our total 2025 volume was produced in Asia (2024: 92%)."

— adidas AG, Annual Report 2025, "Sourcing and Supply Chain", p. 68

Why it matters: every item shipped from Asia into the United States passes US customs. In its 2025 risk report adidas rates tax and customs risks as "high" — with a probability of occurrence of 15 to 30 percent. In the first half of 2026 that showed up concretely: in North America the gross margin was almost unchanged at 44.3 percent because a more favourable product mix was eaten up by higher US tariffs.

There is a movement in the other direction too, and it has now happened: in the second quarter of 2026 adidas had received a first small refund of previously paid US tariffs and put possible further refunds at USD 250 million to USD 300 million — deliberately excluded from the full-year guidance at the time. In the third quarter most of it came: around EUR 200 million, booked in the gross margin, plus around EUR 10 million of interest income. The flip side is in the same report: higher current US tariffs kept weighing on the gross margin. The refund heals the past, not the future. If you want to see what such supply-chain dependence does to the numbers, our Carter's analysis offers a second example where the same constellation hits the margin directly.

Uncomfortable truth no. 5: EUR 7.9 billion of advertising contracts that appear on no balance sheet

At adidas, visibility is not an accident but a contract. And those contracts are large:

"At the end of December 2025, financial commitments for promotion and advertising decreased 3% to € 7,897 million in 2025 (2024: € 8,122 million)."

— adidas AG, Annual Report 2025, "Off-balance-sheet items", p. 91, and notes (38), p. 399

"Off balance sheet" means these payment promises do not appear on the balance sheet at all; they only live in the notes. They fall due regardless — EUR 1,578 million within one year, EUR 4,345 million in one to five years and EUR 1,974 million after that, with remaining terms of up to 13 years. For comparison: total equity on the same date was EUR 5,776 million. adidas has therefore promised federations, clubs and athletes more than the company owns in equity.

This is not a scandal but the business model: without those contracts there are no jerseys in the final and no shoes on the feet of world-record holders. But it is a fixed-cost base that does not shrink along with a weaker year. And it explains why the adidas operating margin sits in the single digits in most years (11.3 percent in its best year, 2019), while at a competitor such as Deckers you find it markedly higher.

Valuation — orders of magnitude rather than a daily price

We name no daily price here, only dated anchors from the reports themselves. On December 31, 2025 the share closed at EUR 169.05 according to the ten-year overview. Multiplied by the 178,665,018 shares outstanding at the time, that gives a market value of about EUR 30,203 million. Measured against 2025 revenue (EUR 24,811 million) that is roughly 1.2 times; measured against earnings per share of EUR 7.46 it is a price-to-earnings ratio of 22.7. At the end of the prior year, with EUR 236.80 and earnings per share of EUR 4.24, the same ratio stood at 55.9 — the share fell 29 percent in 2025 while earnings rose 76 percent.

Two more recent anchors complete the picture. On June 30, 2026 the share closed at EUR 179.40 according to the half-year report. And on July 31, 2026, one day after the half-year figures, adidas published a mandatory disclosure under Article 19 of the EU Market Abuse Regulation: chief executive Bjørn Gulden bought company shares via Xetra for a total of EUR 508,569.05 at an average price of EUR 158.93. Such disclosures are neither a recommendation nor a forecasting tool — an executive can misjudge things too. But they are a data point: on July 31, 2026 the chief executive put roughly half a million euros of his own money into the stock at an average of EUR 158.93 per share — what he expects from it, the disclosure does not say.

Two more such data points followed in September. On September 10, 2026 Gulden bought again, this time for EUR 503,935.25 at an average of EUR 139.98; on the same day the designated CFO Birgit Kretschmer bought shares for EUR 101,071.25 at an average of EUR 140.38 through a joint account with her spouse (both mandatory disclosures under Article 19 of the EU Market Abuse Regulation). At quarter-end on September 30, 2026 the share closed at EUR 145.30 according to the company's fact sheet, for a market value of EUR 25,051 million. On the day of the nine-month figures, October 29, 2026, it closed at EUR 167.15 on Xetra. Measured against 2025 earnings per share (EUR 7.46) that is about 22.4 times; measured against the last twelve months (EUR 9.27, including the tariff refund) about 18.0 times.

Valuation also includes what flows back. For 2025 adidas paid a dividend of EUR 2.80 per share, EUR 491 million in total during the first half of 2026; the payout ratio was 36 percent of net income from continuing operations. On top of that, 2026 brought a EUR 1 billion share buyback that was fully executed within nine months: 6.3 million shares were repurchased and 6.0 million of them already cancelled. The share count fell from 178,665,018 (December 31, 2025) to 172,410,737 (September 30, 2026), a drop of 3.5 percent. Your slice of the pie is getting bigger here, not smaller — at many companies we analyse, it is the other way round. Adjusted net borrowings stood at EUR 4,646 million on September 30, 2026, 3 percent below the prior-year figure (EUR 4,787 million) but above year-end 2025 (EUR 4,331 million); leverage fell from 1.4 at year-end 2025 to 1.3 at September 30, 2026 (September 30, 2025: 1.6). adidas also issued a bond of around EUR 500 million during 2026.

And what does the road ahead look like? Since October 20, 2026 the company's own 2026 guidance reads: 9 to 10 percent currency-neutral revenue growth and operating profit of around EUR 2.5 billion. In the earnings release Gulden speaks of sales growth of "almost € 2.5 billion"; that would put full-year revenue at just over EUR 27 billion and the operating margin at just over 9 percent — just over 8 percent without the one-off tariff refund, roughly the 2025 level and far below the 11.3 percent of 2019. For 2027 management names around 10 percent, for 2028 more than 10 percent. Whether the market wants to pay today's price tag for that path is a price question, not a quality question. It decides the return, not the substance.

Opportunities and risks at a glance

Opportunities

• Demonstrated turnaround: operating margin from 1.3 percent (2023) through 5.6 percent (2024) to 8.3 percent (2025), 2025 operating profit up 54 percent to EUR 2,056 million.
• Broad-based growth in the first nine months of 2026: currency-neutral up 14 percent in North America, 15 percent in Greater China, 23 percent in Latin America, 20 percent in Japan/South Korea and 13 percent in Emerging Markets.
• Direct-to-consumer as a margin lever: up 21 percent currency-neutral after nine months and 17 percent in the third quarter — at a better margin than wholesale.
• Cash is back: EUR 1,971 million generated from operating activities in the first nine months of 2026, after minus EUR 275 million a year earlier; inventories cut to EUR 5,739 million by September 30.
• Balance sheet materially relieved: leverage of 1.3 at September 30, 2026 after 3.3 in 2023, equity ratio 29.2 percent, cash and cash equivalents EUR 1,651 million.
• Returns to shareholders: EUR 2.80 dividend per share for 2025 plus a EUR 1 billion buyback, fully executed; share count down 3.5 percent.

Risks

• Footwear, 53 percent of quarterly revenue, was flat currency-neutral in the third quarter of 2026 after a 1 percent gain in the second quarter; the company describes a lifestyle footwear market weighed down by excess inventory and discounting.
• A record profit with a one-off: third-quarter operating profit of EUR 1,008 million includes around EUR 200 million of one-off US tariff refunds; without them the operating margin would be at last year's level (calculation in the third-quarter chapter).
• Slower growth: up 7 percent currency-neutral in the third quarter after 14 percent in the second; Europe down 4 percent.
• Tied-up capital still above the company's own target: 23.9 percent of sales on average as of September 30, 2026 against a 22 to 23 percent range; inventories 5 percent above last year.
• Sourcing concentration: 92 percent of volume from Asia, of which 27 percent Vietnam, 18 percent Indonesia and 16 percent China — against US customs risks adidas itself rates as "high".
• EUR 7,897 million of off-balance-sheet promotion and advertising commitments with terms of up to 13 years, more than the EUR 5,776 million of equity.
• Change at the top of finance: Birgit Kretschmer has been on the executive board since September 1, 2026 and takes over at year-end from Harm Ohlmeyer, who has held the role since May 2017.

A human bottom line

Back to the wardrobe trap. It is treacherous because it feels like knowledge. You know the products, you see the stores busy, you remember the final — and out of that your mind builds a verdict on a balance sheet you have never read. But the question on the stock market is never "is the brand good?", it is "what does it cost, and what does it earn?".

After the reading, a double picture remains. adidas has a genuine turnaround behind it: 1.3 percent operating margin in 2023 became 8.3 percent in 2025, leverage of 3.3 became 1.3, a EUR 0.70 dividend (for 2023) became EUR 2.80 per share (for 2025), the share count is falling rather than rising, and since the third quarter the cash has been arriving again too. And at the same time: the largest business — footwear — barely moved in two record quarters in a row (plus 1 and 0 percent currency-neutral), a fifth of the third quarter's record profit is a one-off tariff refund that will not repeat in this form, and without it the margin did not rise.

The nine-month figures of October 29, 2026 have therefore answered one of this analysis's three open questions and half of a second: some of the momentum survived the tournament, if at half the pace. The warehouse is shrinking and the cash is arriving, but tied-up capital, at 23.9 percent of sales, is still above the target range. The third question remains open: whether footwear grows again. The next solid answer will be in the 2026 annual report. Until then, every statement about it is a guess — including ours.

What you make of that is your decision. And that is how it should be.

Sources

• adidas AG, Annual Report 2025 (IFRS consolidated accounts, signed February 19, 2026, published with the annual results on March 4, 2026) — key figures, ten-year overview p. 425 f., financial review, working capital, liquidity analysis p. 90, off-balance-sheet items p. 91, Sourcing and Supply Chain p. 68, outlook, risk and opportunity report, notes (38) p. 399, financial calendar p. 434
• adidas AG, results for the third quarter and first nine months of 2026 (October 29, 2026), plus fact sheet, financial supplement with cash flow statement and investor call presentation of the same day
• adidas AG analyst call on financial year 2025, March 4, 2026 (third-party transcript; adidas publishes no authorized verbatim record) — CFO statement on year-end 2026 inventories
• adidas AG, ad-hoc release under Article 17 of the EU Market Abuse Regulation of October 20, 2026 (preliminary third-quarter figures, raised profit guidance)
• adidas AG, managers' transactions under Article 19 of the EU Market Abuse Regulation: Bjørn Gulden and Birgit Kretschmer, both September 10, 2026
• adidas AG, Half-Year Report 2026 and Second Quarter 2026 Results (both published July 30, 2026)
• adidas AG, First Quarter 2026 Results (April 29, 2026)
• adidas AG, managers' transaction under Article 19 of the EU Market Abuse Regulation: Bjørn Gulden, July 31, 2026
• adidas AG, ADR program information (ADDYY, OTCQX International Premier, ratio 2:1, depositary Deutsche Bank Trust Company Americas, CUSIP 00687A107)
• adidas AG, share buyback 2026 information (EUR 1 billion, fully executed after nine months)
• Xetra closing price of October 29, 2026 (source: fundamental data)
• Ranking of the most-discussed stocks in the wallstreet-online forum, as of August 5, 2026 (the hook for this analysis, not a data source for company figures)

Disclaimer: this piece is journalistic analysis and not investment advice, not a buy or sell recommendation and not a solicitation to trade in securities. All figures come from the adidas AG publications named above and carry the reporting date stated there; first published on August 5, 2026, the data cut-off for this update is October 30, 2026. The most recent periodic report evaluated is the third-quarter 2026 earnings release of October 29, 2026; the 2026 annual report may update or correct the values shown here. Equities can cause substantial losses up to and including total loss. Positions held by the operator are disclosed daily; where one exists, it appears as a notice at the top of this deep dive.