Adidas shares sank sharply this morning after the German sportswear giant missed second-quarter profit expectations, weighed down by a substantial increase in marketing spending tied to the FIFA World Cup.

Shares opened more than 15 per cent lower following the earnings release, with the stock trading down 17 per cent at €151.20 at the time of writing. The decline comes despite revenues climbing 14 per cent to £5.7 billion for the quarter. Adidas maintained its full-year operating profit target of £2 billion.

The profit shortfall follows approximately £180 million in marketing expenditure over the past year, driven largely by campaigns connected to the FIFA World Cup hosted by the United States, Canada, and Mexico earlier this year. Adidas produced a blockbuster five-minute promotional advertisement featuring celebrities and athletes including Timothée Chalamet, Lionel Messi, Bad Bunny, Jude Bellingham, Lamine Yamal, and Trinity Rodman. The spend underscores a familiar tension in the global sportswear industry, where heavy investment around marquee sporting events is intended to secure long-term brand visibility and market share, even when it compresses short-term profitability.

The brand identified running and football as major growth categories. A specially developed Adidas super shoe was worn by both the men's and women's winners of the London Marathon earlier this year, a result that highlights Adidas's intensifying push into the high-performance running segment against entrenched competitors such as Nike and fast-growing challenger brands including On and Hoka.

Competitive Pressure Mounts

The share price decline poses a setback for chief executive Bjørn Gulden's strategy to close the gap with Nike, whose market capitalization remains more than double that of Adidas. Gulden, who joined Adidas from rival Puma in January 2023, was tasked with leading a turnaround following the company's high-profile termination of its Yeezy partnership with Ye, formerly known as Kanye West, in late 2022 — a split that removed a significant revenue stream from the brand's portfolio.

Adidas had a strong season in English football, with its iconic three-stripe kits worn during Arsenal's Premier League-winning campaign. The company's largest partnerships include Manchester United and Real Madrid, with each kit agreement valued at upwards of $100 million per season. With Manchester United — the club co-owned by Ineos billionaire Sir Jim Ratcliffe — returning to the Champions League later this year, that deal is likely to increase in value.

Adidas is also an official sponsor of FIFA and provided the match ball used in the World Cup final.

In a leadership change, Birgit Kretschmer is set to join the company as chief financial officer, replacing Harm Ohlmeyer, who will depart when his contract expires at the end of the year.