Dive Brief:
- As Nike’s turnaround drags on, Adidas notched another quarter of growth in Q1, with revenue up 7% to 6.6 billion euros ($7.7 billion at press time). On a currency-neutral basis, revenues were up 14%.
- Growth was broad-based across regions and categories, with Europe up 5%, Greater China increasing 10% and North America inching up 1%, as well as positive results in apparel and accessories. Emerging markets and footwear declined overall, but grew in currency-neutral terms.
- In a discount-heavy wholesale environment, Adidas has been using its DTC channels to sell more of its newest product. DTC was up 15% in the quarter, while wholesale grew just 2%.
Dive Insight:
In a tough economic environment for both retailers and consumers, Adidas is having to “defend newness” from discounts.
As a result, some of the activewear brand’s latest products are debuting on DTC channels and not going straight into wholesale partners, which have become saturated with deals, CEO Bjørn Gulden said on a call with analysts Wednesday. That’s especially true given rival Nike, which has actively been discounting some of its usual top-performing franchises to right-size inventory.
“That would normally not be our strategy at all because we want to be the friend of the retailer. But it is true today that in the discounted environment you might start to do that because you don’t want to put a new shoe that has a full-price launch and then put it into an environment where everything is minus 20,” Gulden said. “I wouldn’t say this is substantial, but of course we would defend newness now in a different way than we would have done 18 months ago.”
DTC will continue to grow faster than wholesale, given the volatility in the wholesale market, Gulden said. DTC was 38% of the business in Q1, while wholesale made up 62%.
“Overall, adidas started 2026 strong, taking share globally, while maintaining full-price selling, which gives us confidence it can deliver on its 2026 sales and profit goals,” Telsey Advisory Group analysts wrote in emailed comments.
The retailer’s outlook calls for currency-neutral sales to increase at a high-single-digit rate in 2026, while operating profit will grow to 2.3 billion euros. This is not accounting for a possible 300 million euros in tariff refunds after the Supreme Court struck down some of President Trump’s tariffs.
A localized strategy continues to gain steam, including everything from investing in smaller sports like paddle and pickleball to designing stores that align with the local culture and interests. Adidas is also investing in creation centers that are tied to local markets.
“Adidas’ strategy to tailor its product offering by region with local lines alongside its global design has clearly paid off,” GlobalData Lead Apparel Analyst Louise Deglise-Favre said in emailed comments. “Indeed, the brand’s direct-to-consumer (DTC) division delivered a currency-neutral growth of 22%, with double digit growth across all regions, which reveals a true strength in supplying products aligned with local demand.”
Strength has carried across use-cases as well, with lifestyle growing 6% on a currency-neutral basis and performance up nearly 30%. In addition to investing in popular performance categories, Adidas is leaning into activities like walking and plans to develop specific products for that need. The retailer’s latest lifestyle offerings — like the Samba Jane and Taekwondo Mei styles — are building on existing demand for low-profile shoes and are “flying” off the shelves, according to Gulden.
A challenge for future quarters is to mirror the success Adidas has had with women on the lifestyle side with men. Still, Gulden is bullish on the sneakers market.
“I know there is some colleagues of you that have said sneakers are over and everything will be formal and that’s why the industry will go down — I don’t think that gentleman is traveling a lot,” Gulden said, adding that the markets with the biggest populations are not close to saturation yet. In Western markets, too, there is more potential for comfortable footwear to target older consumers, the executive said.
