In an industry where innovation is often marketed through foam, carbon, and promises of running economy, Adidas has just delivered a rare demonstration. Product, athlete, timing, and market image have finally aligned. The stock rose by over 2% following the race, before rising even more (+7%) on the quarterly earnings release on April 29, 2026. This sporting and financial sequence is not enough to form an entire investment thesis, but it crystallizes a pivotal moment: Adidas is no longer merely in recovery mode; it is once again setting the pace.
A World Record as a Brand Accelerator
The London Marathon provided Adidas with publicity that money simply cannot buy. Sawe finished in 1:59"30", Kejelcha in 1:59"41", while Jacob Kiplimo, who came in third in 2:00"28", also ran faster than the previous world record. The two-hour threshold, long considered a near-metaphysical limit, was breached in an official race. This changes the scope of the event. Previous attempts by Nike, notably Breaking2 in 2017 or Eliud Kipchoge's non-ratified performance in 2019, had already pushed the collective imagination. However, London 2026 gives Adidas a significant narrative advantage: the first official marathon, completed in under two hours, was run in the three stripes.
The product is central to this story. The Adizero Adios Pro Evo 3 weighs 97 grams, 30% less than its predecessor. Adidas claims a 1.6% gain in running economy, a figure that may seem marginal to the general public but this is significant at the elite level. The model utilizes a carbon-rimmed architecture, allowing the foot to rest on 4 centimeters of ultra-absorbent, high-rebound foam. The upper is inspired by kitesurfing sails, a testament to an uncompromising weight-reduction logic where every gram saved becomes a performance argument.
At $500, it is not cheap. Durability is limited. Stability may be an issue for amateurs. However, the product is not intended to be a consensus shoe. It is a "halo product," a technological showcase, the sporting equivalent of a street-legal concept car. Its value far exceeds the direct volumes that it will generate. It lends credibility to the entire Adizero franchise, elevates the performance image, and gives more accessible models a new legitimacy. Adidas' road running range spans from €140 to €500, enabling the brand to bridge the gap between professional dreams and amateur purchases. At €150, the Adizero EVO SL model was already one of the world's bestsellers in 2025, driven by a massive influencer-led marketing strategy. The London record now provides this mechanism with a more powerful sporting foundation.
Running: The Revenge of a Strategic Territory
Adidas' success in this field is not an accident. Previous models in the Adizero family were already high performers. They were worn by half of the World Marathon Majors winners in 2024 and carried Tamirat Tola to an Olympic record in Paris (2:06:26). In 2025, 7 out of 12 world marathon champions wore Adidas shoes. The brand had therefore rebuilt its credibility before London provided it with a global symbol.
The timing is excellent. Running is establishing itself as a deep, global, highly fragmented but expanding market. In France, over 15 million people practice running, while 26% of non-practitioners express a desire to start. Footwear remains the primary object of desire: 58.2% of runners say they intend to buy a pair within the next six months. As practice intensifies, consumers become more demanding. Amongst runners who cover over 20 kilometers per week, 58.1% regularly purchase their equipment from specialized sports stores, compared to 33.6% for those running less than 10 kilometers. This rise in expertise benefits brands capable of proving their technical prowess.
This is precisely where the London record becomes strategic. Adidas has long been identified as a brand for football, sports culture and lifestyle. Running allows it to rebalance its image around pure performance. The battle is not yet won: among the most committed runners—those participating in at least one race per year—Adidas does not appear in the Top 3 brands considered for purchase, trailing Nike, Asics, and Hoka. However, London could help correct this perception.
Q1 2026: Adidas Confirms the Turnaround is Scaling Up
The London feat comes at the right time. Three days later, Adidas published Q1 results that provide financial weight to this renewed visibility. The group is not just delivering a sporting masterstroke; it is showing that the commercial engine is running again, even in a challenging environment.
Over the first three months of 2026, net sales rose by 14% on a currency-neutral basis to €6.6bn. In reported terms, the increase was limited to 7%, penalized by currency effects with a negative impact of approximately €350m for the quarter. Operating profit rose 16% to €705m, up from €610m a year earlier, significantly beating the €647m expected by analysts. Net income came in at €482m.
These figures reveal two things. First, demand for Adidas remains robust despite retail volatility. Second, the group is regaining a more convincing execution capability, where the market was primarily expecting signs of fragility: promotional pressure, unfavorable currencies, US customs duties, geopolitical uncertainties, and more hesitant discretionary consumption.
Bjørn Gulden's tone remains cautious, but the quarterly data is solid. The CEO described a highly volatile environment marked by heavy promotions in many markets, particularly in lifestyle footwear. It is precisely in this type of configuration that a brand's quality is measured. Adidas is not trying to artificially push volumes through distribution channels. On the contrary, the group claims commercial discipline: not overloading retailers, avoiding excess inventory, preserving prices, and limiting dependence on discounts.
This strategy contrasts with that of Nike, which adopted a more aggressive promotional policy to clear unsold stock. For Adidas, the challenge is not just to sell more, but to sell better.
Growth More Diversified Than Running Alone
While running naturally captures attention after the London Marathon, the Q1 release shows a broader momentum. Adidas is benefiting from a growth foundation that does not rely on a single category or event.
Geographic progress is well-oriented. China grew by 17% on a currency-neutral basis, North America by 12%, and Europe by 6%. This hierarchy is interesting. China confirms its role as a major growth driver, even as Asian consumers become more selective and place higher value on product expertise. North America, a long-troubled market for Adidas following the end of Yeezy, is back on a more encouraging trajectory. Europe grew more modestly, although remains positive in an uncertain and promotional consumer environment.
The group is also benefiting from a very favorable football effect. 2026 is a major sporting year, with the FIFA World Cup taking place in June and July. Adidas maintains historical legitimacy in this category, reinforced by its 22 partner national teams, including Argentina, Germany, and Spain. Demand for football merchandise supported the quarter, even though the group faced supply and transport issues. Nevertheless, the majority of products reached markets, allowing Adidas to approach the competition with significant commercial visibility.
Apparel emerged as one of the clearest highlights of the release. Apparel sales grew by 31% on a currency-neutral basis, far outstripping footwear, which rose by 4%. This differential is essential to the analysis. It shows that quarterly growth is not limited to sneakers or running. Adidas is benefiting from a more balanced dynamic, driven by football, clothing, brand initiatives and the ramp-up of its performance categories.
Running remains a strategic engine, with running shoe sales up over 10%, but it is part of a larger whole. The thesis is not that Adidas is becoming a pure-play running stock. Rather, it rests on the idea that the group is rebuilding several pillars simultaneously: football, performance, apparel, direct distribution, and product innovation.
Direct Distribution as a Quality Signal
One of the most important elements of the quarter lies in the dynamics of distribution channels. Direct-to-consumer (DTC) sales grew by 22%. Specifically, the Adidas website saw a 25% increase and own-brand stores rose by 19%, compared to 8% growth for wholesale.
This point is crucial for the quality of the model. Direct distribution allows for better control over pricing, merchandising, product launches, customer relationships and commercial margins. In a market where competitors are increasing discounts, this ability to sell more through its own channels represents a defensive advantage. It reduces dependence on third-party retailers and allows Adidas to more effectively preserve its brand value.
The group still generates just under 2/3 of its revenue through retail partners. The transformation of the distribution mix will not happen overnight. However, the growth gap between direct and wholesale indicates that the shift is underway. In the medium term, this gradual pivot could support operating margins, provided that logistics, marketing, and technology costs remain under control.
This dynamic also strengthens Adidas' ability to orchestrate its launches. A shoe like the Adizero Adios Pro Evo 3, sold for $500 and distributed primarily via the Adidas app, perfectly illustrates this logic. Even when volumes are limited, the direct channel transforms a product launch into a controlled event, with organized scarcity and a more direct relationship with the most engaged consumers.
Margins: Operational Improvement Despite Headwinds
Operating profit grew strongly, although its gross margin declined to 51.1%, from 52.1% a year earlier. This 100bp drop reflects several headwinds: currency effects, US customs duties and promotional pressure in certain markets.
Nevertheless, operational profitability is resisting. With €705m in operating profit on €6.6bn in revenue, Adidas posted an operating margin slightly above 10% for the quarter. The 16% increase in operating profit, exceeding the reported revenue growth, suggests good execution control despite the pressure on gross margin.
The main lever lies in discipline. Adidas prefers to limit sell-in to retailers rather than sustain low-quality growth. This restraint may seem less spectacular in the short term, but it protects the brand image and avoids the need to fund destructive discounts later. In an industry where the perception of desirability deteriorates quickly when products end up heavily discounted, this decision is financially rational.
The mix can also support margins. Direct sales are growing fast. Apparel is accelerating. Football products are benefiting from an exceptional calendar. Running adds a layer of performance credibility. However, obstacles remain real. Adidas estimates that currency effects and customs duties will weigh approximately €400m on the year. Gross margin could therefore remain under watch, even if the group manages to defend its operating margin through volume, mix, direct channels, and cost discipline.
2026: A Confirmed Roadmap
The primary message of the release is the confirmation of annual targets. Adidas still aims for currency-neutral revenue growth at the high end of a single-digit range, representing approximately €2bn in additional revenue. Operating profit is expected to be around €2.3bn, compared to €2.06bn in 2025.
This confirmation is significant as it comes in a more complex environment than expected. The group must navigate a strong Euro, US customs duties, Middle East tensions, logistics difficulties related to World Cup products and high promotional intensity in lifestyle footwear. Maintaining targets suggests that management considers the commercial momentum robust enough to absorb these pressures.
However, one must distinguish between temporary catalysts and sustainable drivers. The Football World Cup will clearly support 2026. Deliveries associated with the event, jerseys for partner teams, and the global visibility of football are favorable but partially cyclical elements. Conversely, the growth of direct-to-consumer, the rise of running, improved execution in North America, the recovery in China, and commercial discipline can produce more structural effects.
This is where the credibility of the turnaround is at stake. Adidas has seen successful product cycles before, particularly in lifestyle. The question now is whether the group can build growth that is less dependent on isolated phenomena. Q1 provides favorable arguments: apparel is accelerating, football is driving demand, running is gaining legitimacy, direct sales are growing strongly, and key regions remain in growth. The trajectory thus appears more balanced than it did a few quarters ago.
Financial Quality Under Reconstruction
Adidas is emerging from a turbulent period. The break with Yeezy at the end of 2022 deprived the group of a powerful revenue engine, particularly in the US, and a franchise capable of competing directly with Nike in lifestyle footwear. Since then, the challenge has been to rebuild a healthier growth base, less dependent on a single partnership and more anchored in the brand's own categories.
Q1 2026 confirms that this work is progressing. Organic growth is high. Operating profit exceeded expectations. Net profit is becoming substantial again. Annual targets are confirmed. The brand is regaining visibility in performance, as well as in football and apparel. The direct channel is making clear progress. In other words, Adidas is not just repairing its past; it is recomposing its model.
Capital allocation remains less detailed in the available data. A new share buyback program was announced during the 2025 results, but information does not allow for a precise analysis of the amount, pace, or impact per share. It would therefore be premature to make it a pillar of the thesis. On the other hand, inventory management discipline, the refusal to oversupply retailers, and the priority given to full-price sales are already important signals of economic allocation. In this sector, preserving brand capital is often as important as preserving financial capital.
Balance sheet quality, cash flows, and investments are not sufficiently documented here to draw a complete analysis. Caution is therefore advised. However, the combination of double-digit currency-neutral growth, better-than-expected operating profit, and maintained guidance gives the market a more tangible basis to re-evaluate the group's trajectory.
Valuation: The Market Still Demands Proof
Adidas shares are down about 18% YTD and have suffered a 50% drawdown since February 2025 before the positive reactions to the London Marathon and the quarterly release, which seem poised to reverse the trend. This decline reflected investor concerns over US customs duties, currencies, the Middle East conflict, pressure on consumers, and the group's ability to sustain growth after the "Terrace" cycle.
The post-release market reaction was favorable: the stock was up 7% this morning. The market welcomed three simple elements: results beating expectations, solid growth and confirmed 2026 targets. However, the rebound should be interpreted with measure. Precise valuation multiples are not available, preventing a conclusion on absolute attractiveness. The analysis must therefore focus on implicit expectations.
Adidas remains a story of confidence revision. The stock is currently trading at 14.7x estimated earnings for this year, with an enterprise value to sales ratio of 1x, 7x EV/EBITDA, and 3.9x P/B—multiples close to its 10-year lows. If the group demonstrates that growth does not depend solely on the World Cup or a spectacular running product, the market could grant more credit to the 2026 trajectory and beyond, thereby re-rating its multiples. If, conversely, progress slows once the football effect passes, or if margins remain compressed by currencies, tariffs, and promotions, the re-rating could hit its limits.
The stockmarket equation is thus demanding but clear. Adidas must prove that its turnaround is broadening: more categories, more controlled channels, more discipline, and more operational profitability. The first quarter is an encouraging response, but not yet a definitive one.
A Turnaround Story Gaining Density
The Adidas case is becoming more convincing because it no longer rests on a single pillar. Running strengthens the performance image. Football benefits from an exceptional calendar. Apparel is accelerating strongly. China and North America are growing at double digits. The direct channel is gaining ground. Commercial discipline limits the risk of destructive promotions. This combination gives the turnaround a new depth.
The bullish thesis must nonetheless be nuanced. Gross margin is declining, currencies and tariffs are weighing in, the promotional environment remains intense, and part of the 2026 growth is supported by the World Cup. Adidas must therefore still prove that this improvement can last beyond immediate catalysts.
For now, the group projects a healthier image: a brand regaining power, a management team prioritizing sales quality, and a financial trajectory that has become credible again. The stock is not without risks, but the first quarter of 2026 shows that Adidas is no longer just a catch-up play. It is a company starting to build a growth story again, with more discipline and a brand once again capable of making headlines where it truly matters.
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