Adidas dominated the World Cup as the sponsor of the final two teams, Spain and Argentina, the match-day ball, and even the referees. The quadrennial event pushed revenue to a quarterly record of €6.7 billion ($8 billion based on current exchange rates), and the German sports giant raised its year-end revenue forecast.
“Being the CEO of Adidas is a privilege,” Adidas boss Bjørn Gulden said when announcing the company’s second-quarter results on Thursday. “Being the CEO of Adidas during a World Cup is even better.”
Yet the market severely punished Adidas’ stock, sending shares down 19% mid-day in Germany, which would mark the biggest one-day fall since it went public in 1995. The problem was on the expense side, which came in more than $200 million ahead of expectations. Marketing expenses rose $243 million, with campaigns tied to the FIFA event, resulting in operating income of €574 million ($660 million), versus expectations of $770 million.
“Strong Q2 growth momentum underpinned an impressive gross profit beat,” wrote Jefferies analyst James Grzinic in a post-earnings research note. “Unhelpfully for the shares today, this was more than paired back by a remarkable hike in [operating expenses].”
