Soccer fever in Europe and Latin America as well as growth in the North American business make Adidas CEO Björn Gulden more confident.

"The brand dynamics and consumer perception have improved faster than we had expected," he said on Wednesday in Herzogenaurach. "But that doesn't mean we don't still have a lot of work ahead of us." The biggest challenge on the way to an operating return on sales (EBIT margin) of ten percent is to reduce administrative costs. The ten percent is "feasible" by 2026. Adidas had already raised its profit forecast in mid-July and now expects earnings before interest and taxes (EBIT) of one billion euros for 2024 - twice as much as at the beginning of the year. "Don't expect us to double that again this year," said Gulden, putting the brakes on the euphoria.

Unlike the world market leader Nike, which is in crisis, the number two is also growing its business in the USA. Excluding the effects of the discontinued business with the "Yeezy" product line of scandalous rapper Ye, sales there rose by two percent in the second quarter. "We are also seeing some growth in the second half of the year, but are still lagging behind other markets in the USA," said Gulden. Adidas is also growing again in China.

THREE MILLION JERSEYS SOLD AROUND THE EM

In Europe, sales rose by 19 percent in the quarter, in Latin America by as much as 33 percent - driven in each case by the continental soccer championships. "We will work hard to achieve further double-digit growth," said the CEO. This would allow fixed costs to be better distributed. In the past three months, growth worldwide amounted to eleven percent adjusted for currency effects. Both European champions Spain and Copa America winners Argentina played in Adidas jerseys. "We sold a lot more jerseys than expected," said Gulden. Almost three million were sold during the European Championships alone. Germany's pink away jersey turned out to be a fashion hit.

Adidas also reported progress in reducing inventories, which had swelled to six billion euros by the end of 2022. This compares to 4.5 billion at the end of the first half of 2024. CFO Harm Ohlmeyer said that the trend would pick up again in the coming months as Adidas prepares for growth. Gulden admitted that there was definitely a risk in this.

The Norwegian once again played down his own role in the turnaround for the better. "Adidas would have done it anyway, even without me," he said. "Some of it is luck, some of it is timing - and hard work."

(Report by Alexander Hübner and Christina Amann. If you have any questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)