Adidas Q1 2025 presentation: Double-digit growth drives 82% profit surge

Introduction & Market Context

Adidas AG (ETR:ADSGN) presented its Q1 2025 financial results on April 29, 2025, revealing strong performance across most regions and product categories. The German sportswear giant reported double-digit growth in sales and a significant surge in profitability, demonstrating continued momentum for the Adidas (OTC:ADDYY) brand despite ongoing macroeconomic and geopolitical challenges.

The company’s presentation highlighted its success in capitalizing on strong brand heat in lifestyle categories while beginning to extend this momentum to performance products. Management emphasized its strategy as "a sports brand and the culture born from it," focusing on both global reach and local execution.

Quarterly Performance Highlights

Adidas reported impressive financial results for Q1 2025, with net sales reaching €6,153 million, representing a 13% year-over-year increase in currency-neutral terms. The Adidas brand specifically performed even better with 17% growth. Operating profit jumped 82% to €610 million, accounting for 9.9% of net sales, a significant improvement from the previous year.

As shown in the following financial results overview:

Regional performance showed strong growth across most markets, with Latin America leading at 26% growth, followed by Emerging Markets at 23%. Europe grew 14%, while Greater China and Japan/South Korea both increased by 13%. North America showed more modest overall growth at 3%, though the Adidas brand specifically performed much better at 13% growth in the region.

The following map illustrates the regional revenue growth breakdown:

In terms of distribution channels, wholesale represented 65% of revenue and grew by 18%. Direct-to-consumer channels accounted for 35% of revenue, with own retail (21% of total) growing by 13%. E-commerce (14% of total) declined by 3% but showed 18% growth when excluding YEEZY, indicating strong underlying performance.

The channel breakdown is visualized in the following chart:

Looking at product categories, footwear dominated with 61% of revenue and 17% growth. Apparel represented 32% of revenue with 8% growth, while accessories contributed 7% with 10% growth.

Detailed Financial Analysis

A detailed examination of Adidas’ P&L statement reveals substantial improvements across key metrics. Net sales increased from €5,458 million in Q1 2024 to €6,153 million in Q1 2025 (+13% C.N.). Gross profit grew by 15% to €3,205 million, with gross margin expanding by 0.9 percentage points to 52.1%.

The following table presents the key P&L items comparison:

Operating expenses showed effective cost management despite increased investments. While marketing and point-of-sale expenses increased by 14% to €746 million, other operating expenses grew by just 3% to €1,870 million, representing a 3.0 percentage point improvement in leverage. This disciplined approach to overhead costs contributed significantly to the operating profit surge.

The detailed P&L breakdown shows:

The bottom-line performance was equally impressive, with net income more than doubling to €436 million (+155%) and earnings per share reaching €2.44 (+154%). Financial expenses decreased by 49% to €59 million, while income before taxes surged 139% to €585 million.

On the balance sheet side, Adidas maintained a healthy inventory position to support continued growth. Inventories increased by 15% year-over-year to €5,072 million, while accounts receivable grew by 20% to €3,137 million. Accounts payable also increased by 20% to €2,748 million, resulting in operating working capital of €5,461 million (+15%).

The inventory development chart shows a controlled increase over the past five quarters:

Notably, Adidas significantly improved its financial position, with cash and cash equivalents increasing by 32% to €1,432 million. The company’s net leverage ratio improved dramatically from 3.2x in Q1 2024 to 1.6x in Q1 2025, well below the target of 2.0x, demonstrating strong deleveraging despite investments in operating working capital.

Strategic Initiatives

Adidas’ presentation emphasized its position as "the hottest brand" with strong momentum in lifestyle products, particularly in footwear. The company highlighted the success of models like Samba, Gazelle, Handball Spezial, and Campus, which have become fashion staples. The presentation noted significant media coverage of products like the Bad Bunny x Adidas Ballerina sneaker and cow print trainers exclusive to ASOS (LON:ASOS).

The company is now focused on extending this lifestyle momentum to performance categories. Adidas emphasized its commitment to investing "more in sports and in more sports," with global focus on football, running, training, and basketball, complemented by locally relevant sports in different markets.

Innovation remains a key driver, with products like the Adizero contributing to record-breaking performances at the London Marathon 2025, including a women’s world record. The company is also preparing for major sporting events, particularly Fútbol 2026.

Adidas stressed its approach as "a global brand with a local mindset," making decisions at the most immediate level with strong local leadership to ensure relevance across diverse markets.

Forward-Looking Statements

For the full year 2025, Adidas maintains its outlook of double-digit currency-neutral sales growth excluding YEEZY, translating to high-single-digit reported growth. The company expects operating profit to reach €1.7-1.8 billion.

The following slide details the FY 2025 outlook:

Management acknowledged ongoing macroeconomic and geopolitical challenges, including the impact of US tariffs. The company has implemented strategies to mitigate these challenges, including clearing customs for as much product as possible before the April tariff implementation dates, rerouting products, reviewing pricing, and holding a sourcing summit with key suppliers.

Despite these external headwinds, Adidas expressed confidence in its ability to gain further market share, citing a better-than-expected Q1 performance, a strong order book, and positive global brand sentiment. The company remains committed to continued investments in marketing and sales to drive growth.

In conclusion, Adidas’ Q1 2025 results demonstrate strong execution of its strategy, with significant improvements in both top-line growth and profitability. The company appears well-positioned to maintain this momentum throughout 2025, despite external challenges, as it builds on its brand heat in lifestyle categories while expanding its performance credentials.

Full presentation:

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