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Investing.com -- Adidas AG (ETR:ADSGN) published its preliminary results for the first quarter of 2025 after the German close on Wednesday, showing a significant growth in revenues and profits. The U.S.-traded Adidas (OTC:ADDYY) ADRs rose 5.1% today.
The company’s revenues increased by nearly €700 million, reaching a total of €6,153 million. This surpassed the consensus prediction of €6,095 million.
In terms of currency-neutral sales, the company witnessed a 13% rise. When excluding the sales from the Yeezy brand, which was sold off completely by the end of last year, the adidas brand saw a 17% increase in currency-neutral revenues during the quarter. This growth was fuelled by double-digit increases across all markets and channels.
The gross margin for the company also saw an improvement, rising 0.9 percentage points to 52.1%, up from 51.2% in the same period in 2024. The adidas brand itself experienced an even stronger growth in its gross margin, with a rise of 1.6 percentage points.
The operating profit for the first quarter of 2025 also showed a significant improvement, reaching €610 million, up from €336 million in 2024. This was higher than the consensus prediction of €546 million. Consequently, the operating margin stood at 9.9%, a significant increase from the 6.2% recorded in the same period in 2024.
Following the print’s release, Bank of America upgraded Adidas shares to Buy from Neutral, highlighting the company’s "good positioning in [the] current context."
BofA underlined four catalysts they see for Adidas, including strong sales momentum, heightened focus on operating leverage, and limited exposure to U.S. tariffs thanks to its Vietnam sourcing. The bank also sees the stock’s 10% price-to-earnings (PE) premium "as attractive given adidas’ operational outperformance and low EPS risk in a deteriorated environment."
Separately, Morgan Stanley (NYSE:MS) analysts said they do not expect full-year consensus estimates for adidas to rise meaningfully despite the company’s earnings beat, citing ongoing macroeconomic and tariff uncertainties.
Still, they "take comfort" in the fact that the company beat expectations on the top line, gross margin, and operating margin, that the revenue outperformance was broad-based, and that Adidas is "finally posting significant operating leverage," making the ~10% operating margin target for 2026 "look increasingly achievable."
Adidas CEO, Bjørn Gulden, expressed his pride in the team’s achievements in the first quarter. He highlighted the double-digit growth across all markets and channels, despite the volatile environment. He also pointed out the operating profit of €610 million and the 9.9% operating margin as indicators of the company’s great potential.
The company is set to publish its final financial results for the first quarter and host its quarterly conference call on April 29, 2025.