Germany's Adidas posts strong H1 2025 results with $14.03 bn in sales

The company’s gross margin improved by 0.9 percentage points to 51.9 per cent, driven by lower product and freight costs as well as reduced discounting. The operating profit grew significantly by 70 per cent to €1.2 billion (~$1.39 billion), resulting in an operating margin of 9.6 per cent, up from 6 per cent in the same period last year.

The net income from continuing operations more than doubled to €811 million (~$940.76 million), marking a 112 per cent year-over-year (YoY) increase. Correspondingly, basic and diluted earnings per share (EPS) rose to €4.47, compared to €2.05 in H1 2024, reflecting its strong brand momentum and operational efficiency, Adidas said in a press release.

The company reported a 16 per cent increase in inventories to €5.26 billion, attributed to early product procurement and a low comparison base from the previous year. Operating working capital rose by 19 per cent to €5.65 billion, supporting the company’s growth plans for the second half of the year.

The cash and cash equivalents declined by 54 per cent to €768 million, primarily due to increased dividend payouts and strategic inventory investments. Despite the drop in cash reserves, Adidas improved its leverage ratio significantly to 1.7x, down from 2.7x year-on-year, indicating a stronger balance sheet position.

Meanwhile, in the second quarter (Q2) of 2025, Adidas reported net sales of €6 billion (~$6.96 billion), marking a 2 per cent increase in euro terms despite a negative foreign exchange impact of approximately €300 million. The gross margin improved by 0.9 percentage points to 51.7 per cent, supported by reduced discounting and lower product and freight costs.

The operating profit surged 58 per cent YoY to €546 million (~$633.36 million), with the operating margin rising by 3.2 percentage points to 9.2 per cent. The net income from continuing operations rose by 77 per cent to €375 million, while basic and diluted earnings per share climbed to €2.03, up from €1.09 in the same period last year.

From a revenue breakdown perspective, currency-neutral footwear sales increased by 9 per cent, apparel jumped by 17 per cent on the back of robust performance across categories, and accessories grew by 7 per cent. Running led the category performance with a remarkable 30 per cent growth, followed by double-digit gains in Training, Sportswear, and Performance Basketball. The Lifestyle segment remained strong, with Originals and Sportswear both recording growth above 10 per cent.

Regional performance was broad-based, led by Latin America with a 23 per cent increase, North America at 15 per cent, and Greater China at 11 per cent.

All sales channels contributed positively, with wholesale revenue growing 14 per cent and both own retail and e-commerce sales increasing 9 per cent.

Adidas has reaffirmed its full-year guidance despite growing macroeconomic uncertainties and potential adverse impacts from US tariffs. The company continues to expect currency-neutral sales to rise at a high-single-digit rate, supported by robust brand momentum, an enhanced product portfolio, strong order books, and improved retailer relationships. Operating profit is projected to reach between €1.7 billion and €1.8 billion, underpinned by improved gross margins and operating efficiencies, even as marketing investments remain elevated.

The outlook excludes any contribution from Yeezy, whose sales in 2024 amounted to around €650 million with an operating profit of approximately €200 million.

“I am very happy and actually again proud of what our team has delivered in both the second quarter and first half of 2025. We have continuously grown double digits, and we ended the first half year with growth of 14 per cent for the adidas brand,” said Bjørn Gulden, CEO at Adidas.

“We still have a lot to improve, and we are far away from having optimised our business model. We are convinced that being a global brand with a local mindset is the right strategy to be globally successful. Our vision is to hire, develop and retain the best people to run our business in the different markets, to be close to the consumer and the local culture, have the right products and the relevant marketing for each market,” added Gulden.

ALCHEMPro News Desk (SG)