adidas: A Record Quarter With a Benefactor, and a Q4 Bill for 2027
The EUR 200 million tariff refund did the heavy lifting on margin; what management does with the leftovers — and what it has stopped promising — is the actual story
ADS.DE · Earnings Call · 2026-10-29
The beat had a benefactor, and management said so
adidas delivered EUR 7.2 billion of quarterly sales, up 7% currency-neutral and 9% reported, with a 54.3% gross margin and a record operating profit of EUR 1.08 billion — up 37% year on year, flowing through to net income of EUR 711 million and earnings per share of EUR 4.06. Nine-month sales reached EUR 20.6 billion with EUR 2.287 billion of EBIT, already nearly touching the full-year guidance the company carried into the year. But Bjørn Gulden did not let the number stand on its own: “Gross margin at 54.3%, yes, helped by EUR 200 million tariffs that Mr. Trump gave back to us. Remember when you do this, that these EUR 200 million are tariffs that we have paid over the last quarters, so this is just getting back what we have paid too much.” — Bjørn Gulden, CEO · 2026-10-29 Harm Ohlmeyer put the underlying margin at roughly 51.5% — itself an improvement on last year's 51.8% headline, but a very different number from the one printed at the top of the release. This is not a company-unique insight, and that matters. The market's own keyword table shows tariff refund sitting atop the global list in 2026Q2 and net tariff refunds still ranking in the top five in Q3. In the last five days alone, VFC, AEO, ORLY, ACU, BOOM and ANF have all reported booking the same money. Any investor modelling adidas's Q3 margin as a run-rate is modelling a government cheque. The company's own keyword history makes the pivot legible: adidas's quarters through 2025 and early 2026 were dominated by Supreme Court litigation language and tariff discussion — the vocabulary of paying. This quarter the dominant new word is refund, the vocabulary of reclaiming.Two speeds, and the slower one is the famous one
Strip the refund out and the operating story is a company running on one engine while the other cools. Performance grew 14%, apparel nearly 20% with Originals apparel growing close to 50% off a small base, footwear was flat overall, accessories up 5%. Running grew 19% on the back of Adizero, the Evo SL franchise, the Hyperboost comfort platform and a Supernova relaunch landing next summer. Greater China grew 13% with D2C up 21%; North America grew 12% for the quarter and 40% year to date. The drag is the category that made adidas fashionable again. “Actually, we are seeing the success globally. Yes, the white elephant in the room, the lifestyle footwear market is currently difficult. Yes, you see a lot of discounts.” — Bjørn Gulden, CEO · 2026-10-29 The channel split tells the same story more sharply: D2C brick-and-mortar up 16% with like-for-like around 13%, e-commerce up 18%, wholesale up only 2%. Europe fell 4%, of which up to EUR 50 million — roughly 2 percentage points — was an S/4HANA migration shifting wholesale shipments into Q4. This is the crux. Lifestyle footwear has been a top-five keyword in adidas's own quarterly language for three straight quarters now — it is not a new problem, it is the problem. What is new is the framing. In March, Gulden was “counting on that this will disappear over time” — Bjorn Gulden, CEO · 2026-03-04 on discounting. In May, asked when the market would clean up, he answered “I wish I had that. I think that will be legal, so I don't.” — Bjorn Gulden, CEO · 2026-05-02 Now the answer has acquired a date, and the date has moved out: back end of 2027 at the earliest, and contingent on competitors he cannot see.That is a candid answer, and it is also an admission that the recovery is exogenous. Meanwhile performance footwear and Originals apparel are doing the work of carrying the flat footwear line — which is precisely the portfolio diversification Gulden has been promising since 2023, now being stress-tested.I cannot tell you when that will end because it's depending on all the other brands. I would assume that when you talk to them, they have similar discussions, and therefore, I would personally believe that at the back end of 2027, we will be in a different situation. But I don't have the numbers to back that up, but I feel it, if I'm really honest with you.
The things that stopped being said
Two vocabularies have quietly exited the call. The first is tariff mitigation. Across 2025 and into 2026, adidas spent enormous airtime on sourcing shifts out of China, selective price increases, supplier negotiation, and the insistence that it would not lead on U.S. pricing. This quarter, that apparatus is idle. Ohlmeyer on the go-forward cost: “that will not be meaningful going forward. It is all like for like now.” — Harm Ohlmeyer, CFO · 2026-10-29 And on pricing, Gulden noted that average selling prices are rising — but not because prices were raised, rather because the mix tilted toward higher-priced Originals apparel and performance footwear. The second is wholesale conservatism. Wholesale partner has been the single highest-ranked keyword in adidas's own language in two of the last four quarters, always in the context of withholding supply from a discounting channel. Now the tone inverts: retailers are asking for more than adidas is giving them, and the company is deliberately not flushing product into a market it expects to discount it. “I think it's pretty obvious right now that the demand is highest in the performance area, because performance is not having the same inventory issues as lifestyle.” — Bjørn Gulden, CEO · 2026-10-29 It is a disciplined position, and it is also a cap on wholesale growth that the company is choosing.A kitchen-sink Q4, a handover, and the shape of 2027
The most interesting decision in the release is what adidas does with the windfall. Rather than flow the refund through, the company is deliberately taking EUR 100 million of charges in Q4 — writing off stores and other assets, retiring software and IT systems that AI is replacing, and streamlining headcount and structures — to arrive at a EUR 2.5 billion full-year EBIT rather than the EUR 2.6 billion the arithmetic would otherwise permit.Read that as an outgoing CFO cleaning the decks for an incoming one. Ohlmeyer signs off after 29 years and a decade in the chair; Birgit Kretschmer joined the executive board in September and takes over in January. The guide for 2027 is unchanged — high single-digit growth, EBIT around 10% — and 2028 remains above 10%. That is a reconfirmation, not an upgrade, even as the EBIT path for 2026 was walked from EUR 2.3 billion to 2.4 to 2.6 to a stated 2.5. Note also where AI sits in this narrative: not as product, not as growth, but as a balance-sheet write-off and a weekly cost review. That is a striking contrast with the broader market's low profile… no — with the broader market's agentic-AI enthusiasm. adidas is on the deflationary side of that trade, and says so plainly. Where does this leave the equity? The operating momentum is real — performance and apparel are compounding, China is compounding, and the balance sheet carries roughly EUR 1.7 billion of cash after a EUR 1 billion buyback and a EUR 500 million dividend. But the margin headline flattered, the recovery in the single largest fashion category is out of the company's hands and now dated to late 2027, and the EUR 100 million Q4 charge is an explicit statement that 2027's cost base is being bought with 2026's luck. A record quarter that management itself declined to present as a clean one.Why don't we take EUR 100 million of those in Q4 and find things that we can reduce our cost base for 2027 going forward? That is assets, so it can be stores and other assets that we don't need anymore that we can write off. It can be software and systems that are going to be replaced by AI that we can take off the balance sheet and not depreciate.