Adidas AG reported preliminary fourth-quarter figures indicating a 10% increase in revenue on a currency-neutral basis, and an 11% gain when excluding products from the Yeezy lineup. The company also recorded a gross margin outcome that topped forecasts by 90 basis points, a set of results that propelled Adidas AG ADR shares higher by 4% on Thursday.
Alongside the initial results, Adidas unveiled plans to repurchase up to 1 billion of its stock during 2026, with repurchases slated to begin in February. This program represents the company's first formal buyback initiative since 2022.
Profitability and margin trends
On the profitability front, Adidas reported an operating margin of 2.7% for the fourth quarter, an improvement of 170 basis points versus the prior year and in line with market expectations. The company's gross margin rose by 100 basis points to 50.8%, exceeding analyst forecasts by 90 basis points despite encountering headwinds from increased tariffs and foreign exchange pressures.
For the full year, the Adidas brand delivered 13% currency-neutral growth, marking the second straight year at that growth rate. Management noted that this expansion was broad-based, driven by double-digit percentage gains across all markets and channels.
Analyst reaction and financing the buyback
Analysts at Morgan Stanley described the preliminary fourth-quarter results as "encouraging from both a quantitative and qualitative standpoint." Company commentary emphasized that the planned share repurchase will be funded through strong cash flow generation, a robust balance sheet, and management's confidence in future brand development. Bernstein highlighted that the buyback equates to an up to approximately 10 cent increase to earnings per share.
Adidas has indicated it will present more detailed guidance when it provides full-year results on March 4.
Implications for investors and markets
The combination of accelerating currency-neutral sales growth, margin expansion that beat expectations, and a sizable buyback program underpins the positive market response to the preliminary results. Investors will be watching the March 4 full-year presentation for more granular guidance and confirmation of the preliminary figures.