Sportswear giant Adidas drops 8% after profit guidance disappoints

German sportswear giant Adidas saw its shares plummet as much as 8% on Wednesday after providing disappointing 2026 profit outlook, as the company grapples with unfavorable currency swings and a hit from U.S. tariffs that are weighing on investor confidence. The company expects 2026 revenue growth in the high single digits from 2025's total of 24.8 billion euros ($28.86 billion), with operating profit increasing to around 2.3 billion euros, despite facing a 400 million euro negative impact from U.S. tariffs and unfavorable currency developments. Analysts expressed disappointment, with RBC Capital Markets noting the profitability outlook fell 15% below overall expectations, while Jefferies analyst James Grzinic highlighted that the implied 9% margin from the operating profit projection was well shy of market expectations. The fourth-quarter results also slightly missed estimates, with sales reaching 6.1 billion euros and profit at 164 million euros in constant currencies, according to FactSet data. Despite these challenges, CEO Bjørn Gulden emphasized that driving double-digit growth in the fourth quarter despite external turbulence and more than doubling operating profit made the year end very well. Adidas also presented mid-term targets, projecting currency-neutral sales growing at a high single-digit rate in 2026-2028, with operating profit expanding by a mid-teens annual growth rate over that period. The extended decline in Adidas shares, which have fallen about 43% over the past year, reflects broader skepticism about the growth prospects of the global sportswear industry, characterized by excess supply and changing consumer preferences in China. Competitors like Puma and Nike have faced similar challenges, with Nike's CEO recently acknowledging it would take time to return to profitable growth. In a move signaling confidence in the turnaround strategy, Adidas extended CEO Bjørn Gulden's contract until 2030, as he continues to steer the company recovery following its high-profile split with rapper Ye over antisemitic comments.