Adidas weak profit outlook sinks shares as US tariffs, Middle East crisis weigh

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By Linda Pasquini and Helen Reid

BERLIN, March 4 (Reuters) – Adidas shares tumbled as much as 7% on Wednesday after the German sportswear maker issued a 2026 profit outlook that fell short of market expectations, eclipsing news that it had extended CEO Bjorn Gulden’s contract through 2030.

Investors have grown more pessimistic about the prospects for growth at sportswear brands, with companies such as Adidas heavily exposed to manufacturing hubs in China and Vietnam and facing steep U.S. tariffs on imports from those countries.

Adidas forecast operating profit of around 2.3 billion euros ($2.7 billion) this year, implying a margin of less than 9% according to analysts. The group had previously targeted a 10% margin, which it now expects to achieve only in 2028.

At a press conference, Gulden sought to reassure investors that the brand is winning over more consumers, while chief financial officer Harm Ohlmeyer said Adidas would have hit a 10% margin this year if it weren’t for the impact of U.S. tariffs and a weak dollar, which together will reduce earnings by 400 million euros this year.

“We are very, very confident for the future, not just 2026 but also beyond,” Ohlmeyer said. 

IMPACT OF TARIFFS, WEAK DOLLAR, MIDDLE EAST

The 400 million euro estimate does not account for recent tariff changes following the Supreme Court ruling against U.S. President Donald Trump’s tariffs, Gulden added, noting potential “upside”.

He said the conflict in the Middle East would also weigh on revenue, with some stores forced to close. One Adidas store in Israel run by a franchise partner was damaged in an attack but had been shut at the time, chief commercial officer Mathieu Sidokpohou said. Adidas has 350 stores in the region, 200 of them operated by franchise partners.

The extension of Gulden’s term – previously due to end in 2027 – reinforced confidence in his strategy for Adidas, which reported a loss in 2023 but has since recovered.

Gulden took over in early 2023 with a mandate to steady Adidas after its split with rapper Ye over his antisemitic comments which triggered a crisis, which exposed how much the brand had relied on the Yeezy sneaker line.

“Gulden has proven to be a “best-in class CEO” when it comes to localisation strategies as well as sustaining trends and pushing successful products over an extended period of time,” said Felix Jonathan Dennl, analyst at Frankfurt-based Metzler.

Adidas also proposed Egyptian billionaire Nassef Sawiris as its new chairman to replace Thomas Rabe, who has faced shareholder criticism for holding too many other executive roles.

WEAK DOLLAR WEIGHS ON NORTH AMERICA

Adidas said it expects currency-adjusted sales to grow at a high-single-digit rate in 2027 and 2028. It reported 2025 sales of 24.8 billion euros, up 10% in currency-adjusted terms, and operating profit of 2.06 billion.

Sales in North America, Adidas’ second-biggest market, grew 10% in currency-adjusted terms last year but fell 1% in euro terms, due to a weaker dollar. 

Gulden said the company had kept discounting in check and continued to sell “the right product in the right amount” across markets.

Management proposed a dividend increase of 40% to 2.80 euros per share for 2025.

($1 = 0.8625 euros)

(Reporting by Alexander Huebner in Munich and Linda Pasquini in Gdansk; Additional reporting by Helen Reid in London; Editing by Shri Navaratnam, Tomasz Janowski, Bernadette Baum and Louise Heavens)