Adidas (XTRA:ADS) Stock Faces Margin Questions After Record Revenue

adidas stock is coming into this print on the back foot, down about 8% over the past week and roughly 12% over the past month, which tells you sentiment was already fragile before the numbers hit. The results themselves center on one thing that cuts through the noise. Q2 delivered adidas’s highest quarterly revenue on record at €6.7b, helped by a gross margin around 52%. The market’s recent chill on the stock now sits against an earnings report built on volume, pricing power and a very full direct to consumer pipeline.

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Q2 2026 Earnings Summary

• Revenue, Q2 2026 vs. Q2 2025: €6,743m vs. €5,952m (up about 13%)
• Net Income, Q2 2026 vs. Q2 2025: €369m vs. €363m (up about 2%)
• Basic EPS, Q2 2026 vs. Q2 2025: €2.10 vs. €2.04 (up about 3%)
• Gross Margin, Q2 2026 vs. Q2 2025: about 52% vs. prior year quarter not specified (margin held at a high level in Q2 2026)

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Adidas bull case: record Q2 tests the thesis

The bullish story around adidas is that product momentum, World Cup exposure and a bigger direct to consumer mix can support a healthier revenue and margin profile. Q2 gives that thesis real proof points. Revenue reached a record €6.7b, up about 14% currency neutral, with DTC growing 24% and taking the mix to about 57% of sales. That is exactly the channel shift the bullish narrative expects. Gross margin held near 52% despite a €212m step up in World Cup marketing and higher DTC fulfilment costs, so pricing and mix look resilient. Performance categories like running, training and motorsport grew strongly and World Cup jerseys moved roughly 18m units, which backs the argument that adidas can still create must have franchises. The guidance lift to 9–10% full year revenue growth also lines up with the view that this is more than a one quarter spike.

Adidas bear case: margin pressure and sustainability checks

The bear story focuses on earnings drag from heavy event marketing, competitive pressure and execution risks in areas like tariffs and sustainability. Q2 margins partially support that concern. Gross margin stayed high, yet EBIT grew only 5% as operating expenses rose, with marketing up 30% and overheads up 12%. That confirms that World Cup spend is limiting earnings flow through even in a record sales quarter. Lifestyle footwear softness and promotional pressure around certain franchises also echo worries about fashion cycle risk. Inventory is up 12%, although management says about 90% is current or future season stock, so the feared overhang has not shown up in write downs. Tariff refunds of €250–300m are still unbooked and excluded from guidance, which keeps some uncertainty around US profitability. Scrutiny of adidas sustainability claims by regulators also shows brand and regulatory risk is real rather than theoretical.

After record sales that still translated into modest EBIT progress, are these margin headwinds isolated or structural? Review the independent risk analysis for adidas which shows 1 important warning sign

Stay Ahead With adidas Insights

If adidas’s record Q2 revenue and solid gross margin have your attention, register for free with Simply Wall St and add it to your Watchlist to track price against fair value and watch how sentiment shifts around future results. Once you are invested, keep your decisions grounded in data by using the Portfolio Command Center to filter out noise and focus on the most important alerts across all your holdings. For a broader view, tap into the Community to see how other investors are thinking about adidas and related opportunities. By spotting potential catalysts and risks early, you give yourself a better chance of staying a step ahead of the market.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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