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FinanceAdidas shares plunge up to 17% after World Cup marketing spend hits profit
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Adidas shares fell more than 15% in early trading after the German sportswear giant missed second-quarter profit expectations, despite a 14% revenue increase to £5.7bn. The profit miss was attributed to a £180m marketing spend, largely driven by campaigns for the FIFA World Cup hosted by the US, Canada, and Mexico. The high-profile World Cup advert featured celebrities including Timothée Chalamet, Lionel Messi, and Bad Bunny. Adidas maintained its full-year operating profit target of £2bn. The share price drop, reaching 17% to €151.20, challenges CEO Bjørn Gulden’s goal of closing the gap with rival Nike. The company cited growth in running and football sectors, and noted strong kit deals with Manchester United and Real Madrid. Adidas also announced Birgit Kretschmer will replace Harm Ohlmeyer as CFO at year-end.
Source report
Adidas shares fell sharply this morning after the sportswear giant missed quarterly profit expectations, driven by increased marketing expenditure linked to the FIFA World Cup.
Market Reaction
Shares in the German company opened more than 15% lower following weaker-than-expected second-quarter profits. The decline came despite a 14% rise in revenues to £5.7 billion. Adidas maintained its full-year operating profit target of £2 billion.
At the time of writing, shares had fallen 17% to €151.20.
Marketing Spend
The profit miss follows a marketing spend of £180 million over the past year, led by campaigns tied to the FIFA World Cup, which was hosted by the United States, Canada, and Mexico.
Adidas produced a five-minute blockbuster advertisement for the tournament, featuring Timothée Chalamet, Lionel Messi, Bad Bunny, Jude Bellingham, Lamine Yamal, and Trinity Rodman.
Growth Sectors
The brand identified running and football as key growth areas. It highlighted a special "super shoe" used by both the men's and women's winners of the London Marathon earlier this year.
Competitive Landscape
The share slump undermines CEO Bjørn Gulden's strategy to close the gap with rival Nike, whose market capitalisation is more than double that of Adidas.
Football Partnerships
Adidas enjoyed a successful English football season, with its iconic three-stripe kits worn by Arsenal during their Premier League-winning campaign.
Its largest kit deals remain with Manchester United and Real Madrid, each worth upwards of $100 million per season. With Manchester United returning to the Champions League later this year, the value of that agreement — with the club co-owned by Ineos billionaire Sir Jim Ratcliffe — is expected to rise.
Adidas is also a FIFA sponsor and supplies the match ball for the World Cup final.
Leadership Change
Birgit Kretschmer is set to join Adidas as chief financial officer, replacing Harm Ohlmeyer, who will leave when his contract expires at the end of the year.
Source
City AMWestern
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Adidas shares plunge after hike in World Cup marketing spend