Shares of Adidas slid sharply in European trading on Wednesday after the German sportswear giant warned that new tariffs and currency pressures could weigh heavily on profits this year. Investors reacted to a cautious 2026 outlook despite solid growth in the company’s latest annual results, pushing the stock significantly lower on the Frankfurt exchange.
The selloff sent Adidas AG (ADS.DE) shares down about 7% to roughly €136, marking one of the steepest single-day declines for the stock in recent months. The drop came after the company said that U.S. tariffs and unfavorable currency movements could reduce profits by around €400 million in 2026.
The warning highlights the growing pressure facing global consumer brands as geopolitical trade tensions and foreign exchange volatility continue to reshape international supply chains and corporate earnings.
Tariffs and currency shifts cloud Adidas outlook
Adidas said it expects operating profit to reach around €2.3 billion in 2026. While the forecast suggests improvement from the €2.06 billion operating profit reported in 2025, investors had been expecting stronger guidance as the company continues its turnaround under CEO Bjørn Gulden.
The company pointed to two main headwinds likely to affect profitability this year. First, new tariffs tied to U.S. trade policy could raise costs for products manufactured in Asia. Adidas relies heavily on production facilities across countries such as Vietnam, Indonesia and China, which are key components of its global supply chain.
Second, the strengthening of the euro against the U.S. dollar has created an additional financial drag. Because Adidas generates a large share of its revenue outside Europe, a stronger euro reduces the value of international earnings when converted back into the company’s reporting currency.
Together, the company estimates that these factors could reduce operating profit by roughly €400 million in the coming year.
Strong 2025 performance fails to reassure investors
The cautious outlook overshadowed otherwise strong financial results for the past year. Adidas reported net income of €1.34 billion in 2025, representing a jump of about 75% compared with the previous year as the company benefited from renewed consumer demand and improved product strategy.
Annual revenue also climbed, reaching approximately €24.8 billion, reflecting a steady rebound in both footwear and apparel sales. Popular lifestyle sneakers such as the Gazelle and Samba models have helped drive brand momentum across key markets in Europe and North America.
The company said currency-neutral revenues are expected to grow at a high-single-digit rate in 2026, potentially adding around €2 billion in additional sales. However, the market reaction suggests investors are more focused on margin pressure than revenue growth.
Competitive pressure in global sportswear market
Adidas remains the second-largest sportswear company globally by revenue, trailing only industry leader Nike. The competitive landscape has intensified in recent years as established brands and newer athletic labels battle for market share in footwear, performance apparel and lifestyle fashion.
Analysts say Adidas must continue to innovate and maintain strong consumer demand if it hopes to sustain its recovery momentum. At the same time, the company faces rising marketing costs and supply chain adjustments as it navigates shifting trade policies and global manufacturing challenges.
Financial analysts cited by Reuters noted that the company’s profit guidance and operating margin expectations came in slightly below market forecasts, which contributed to the sharp drop in the share price.
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Leadership stability signals long-term confidence
Despite the near-term challenges, Adidas signaled confidence in its long-term strategy by extending the contract of Chief Executive Officer Bjørn Gulden until 2030. Gulden took over leadership of the company in 2023 during a turbulent period following Adidas’ split from rapper Ye, formerly known as Kanye West.
Under Gulden’s leadership, Adidas has focused on rebuilding brand credibility, improving product innovation and strengthening partnerships with retailers and distributors worldwide. The strategy has helped stabilize sales and restore investor confidence after several years of operational challenges.
Gulden said the company’s performance in 2025 had turned out “much better than expected” when the year began, reflecting strong consumer demand and improved product execution.
Investors watching for signs of sustained recovery
The sharp share price decline illustrates how sensitive investors remain to any signs of slowing growth or margin pressure in the global apparel sector. While Adidas continues to benefit from strong brand recognition and a growing lineup of popular footwear models, external factors such as tariffs, exchange rates and supply chain costs remain difficult to control.
For investors, the key question now is whether Adidas can maintain its sales momentum while protecting profitability. If the company succeeds in navigating these headwinds and delivering on its revenue growth targets, analysts believe the current selloff could prove temporary.
Until then, the market is likely to remain cautious. With the stock now trading near €136 after the latest decline, investors will be closely watching upcoming earnings updates and economic developments to assess whether the sportswear giant can continue its turnaround in an increasingly complex global environment.
