Adidas Posts Early Earnings Surprise on Samba Wave

Adidas dropped its fiscal third-quarter earnings Tuesday, two weeks earlier than planned. The company reported better-than-expected third-quarter results, and increased its full-year guidance to reflect the “current brand momentum.” 

The German sneaker and sportswear company originally scheduled its quarterly earnings for Oct. 29.

Adidas said Q3 revenues grew 7% to €6.438 billion, or around $7 billion, from the prior year. Excluding Yeezy sales, revenue increased 14% during the quarter.

The company’s operating profit is now expected to reach a level of around € 1.2 billion (or $1.3 billion); it previously expected to reach a level of around €1.0 billion.

Adidas has surprised on earnings to the upside two other times this year, raising its annual profit target amid soaring demand for classic sneakers like the Samba and more sales from the shrinking stockpile of Yeezy footwear.

The three-stripe brand has seen an enormous boost from sales of its popular Samba and Gazelle sneakers, as well as the trending SL 72 models. 

The Samba craze is “the main reason the landscape has shifted for Adidas over the past couple of years,” said Mike D. Sykes, who writes “The Kicks You Wear” blog. Sambas were so hot they were selling out on Adidas.com as well as retailers and resale sites, according to some reports.

In an earnings preview note published Oct. 1, French German financial services group ODDO BHF wrote it believes “that further double-digit top-line growth in Q3 2024 implies that Adidas is outgrowing major peers such as Nike and Puma.” 

Adidas is the No. 2 player in sportswear lifestyle products, well behind Nike. But Nike has seen a decline in sales over the past year as it’s struggled with its direct-to-consumer strategy and lack of product innovation; it brought in a new CEO this month to turn things around. 

But as with any trend-driven sales growth, it’s not a question of if it will pass, but when. 

Adidas is hoping its classic Superstar shoe—a retro style that was popular in the early 2000s—will spark another trend with a refresh. A spin on the original, the Superstar Millennium launched in August. 

The brand has strong momentum from Sambas, and “there’s reason to believe the momentum will continue into 2025,” says Jörg Philipp Frey, an analyst at Warburg Research GmbH, an equity research provider based in Germany. However, double-digit growth margins can’t last forever. 

It gets tougher to generate more momentum when everyone is expecting double-digit top-line growth, Frey tells Front Office Sports. “For the foreseeable future we are fine. But they can’t keep surprising to the upside,” because those surprises are getting tougher and getting smaller. “It’s a key headwind for Adidas,” he said, adding that the risk-reward ratio is not as great as some people believe, which is why Frey says he has a hold rating on Adidas.

“To think Samba can continue growing as much as it has is naive,” said Matt Powell, senior advisor with BCE Consulting. “I’d say make it more scarce.”

The full earnings release, with more detail, will come Oct. 29.