Adidas has raised its full-year guidance for the second time this year, just days after the Spain team, which it sponsors, won the Euros.
Operating profits almost doubled in the second quarter of the year, from £147m to £346m, up by 45 per cent.
Sales rose by nine per cent to £4.8bn, boosted by high-performing Samba and Gazelle lines.
The sportswear company said it expected to deliver an operating profit for the year of £839m, up from its previous guidance of £587m. Adidas’ stock rose by four per cent in early trading on the stock exchange in Frankfurt.
Chief executive Bjorn Gulden has been pushing a turnaround plan at the company after a break with Kanye West left it with £1bn worth of unsold Yeezys.
The company has been increasing distributions through independent retailers, as well as scaling down attempts to control a greater share of its sales.
“The Adidas brand is in good shape, brand desirability and visibility remain healthy across key categories and markets, which sets a strong foundation for an organisational reset,” RBC said. Adidas’ profitability target of 10 per cent is “achievable”, he added, “on the basis that Adidas can meaningfully improve revenues and gross margin”.
“However, conviction on whether this can be done by 2026 remains to be seen.
Adidas said that it sales to retailers were strong over the quarter, as well as “reduced discounting, lower sourcing costs and a more favourable category mix”.
It cautioned that currency fluctuations would “weigh significantly” on profitability in 2024.
The good news for the company comes after a poor trading update from Nike last month.
“Big brands like Adidas and Nike have been clouded by worries that younger, fresher brands were eating their lunch and consumers were losing their appetite for buying the latest trainers,” AJ Bell said. “Adidas has now increased its full-year guidance for the second time in three months, putting a spring in its step.”
In July last year, Adidas agreed a £900m deal to sponsor Manchester United’s kit for a decade.