adidas Expected to Report Highest Profit Margin in Three Years During Q2 2024

While Nike is projecting a 10% sales decline in fiscal Q1 2025 (and has subsequently seen its shares fall by as much as 20%), adidas’ financial forecast is beginning to look quite promising. According to Business of Fashion, analysts expect the German sportswear giant to report a profit margin of 51.4% in Q2 2024, which would become the brand’s highest growth rate in the last three years.

While Nike’s shares fell, adidas’ shares remained mostly unaffected, meaning that investors are viewing Nike’s declining sales forecast as a growth opportunity for adidas, per the outlet. In the first quarter of this year, adidas beat sales expectations with an 8% increase in revenues, which was largely driven by the brand’s Lifestyle category and, more specifically, its Originals footwear.

In particular, adidas’ Samba and Gazelle footwear models continue to propel the brand’s sales higher, and online searches for “Adidas Samba” have surpassed those for “Nike Air Force 1” over the last six months, per Google Trends. “Nike, in terms of product and message, is very much off its game and Adidas is having a bit of a moment,” Tanyard Advisory retail analyst Simon Irwin told BoF.

At the time of the label’s Q1 financial report, adidas CEO Bjorn Gulden stated that the company will “continue to ‘over invest’ into the product, into the brand, into sales and marketing to ensure continued growth,” in lieu of optimizing short-term profit. He admitted that the brand is “not as good as [it] should be” financially, as it continues to come back from losing its once-popular YEEZY line; but with positive momentum, analysts predict that adidas’ quarterly revenue will climb 4.5% to reach 5.6 billion EUR (or $6.1 billion USD).

adidas will release its Q2 2024 financial report on July 31.