Adidas delivered another quarter of robust revenue growth and raised its full year sales outlook after strong consumer demand for its retro footwear and the FIFA World Cup boosted performance.

However, weaker than expected profitability and cautious guidance for the months ahead unsettled investors, triggering the steepest single day share price decline in the company’s history.

The German sportswear giant entered the second half of the year with stronger sales momentum after recording double digit growth across most of its global markets.

Nevertheless, investors looked beyond the headline revenue gains and focused instead on shrinking margins caused by aggressive marketing investments and rising expectations that followed the World Cup.

Consequently, Adidas shares plunged nearly 19 per cent in trading, placing the stock on course for its biggest one day decline since the company debuted on the stock market in 1995.

The sharp selloff erased part of the impressive gains the company had accumulated in recent months and reflected growing concerns over whether its current growth pace can be sustained after the global football tournament.

Even so, Adidas strengthened its revenue outlook for the full year, projecting currency neutral sales growth of between 9 and 10 per cent, an improvement from its earlier forecast of high single digit growth.

At the same time, the company maintained its operating profit guidance of approximately €2.3 billion, signalling confidence in its broader business strategy despite near term cost pressures.

During the second quarter, currency neutral revenue climbed 14 per cent to €6.74 billion, comfortably surpassing market expectations of €6.63 billion.

The strong performance was fuelled by continued demand for Adidas’ lifestyle collections, successful World Cup related campaigns and broad based growth across nearly every major region.

In fact, every geographic market delivered double digit expansion except Europe, where persistent retail discounting and softer demand for lifestyle footwear continued to weigh on sales.

Meanwhile, profitability told a different story. Operating profit increased by five per cent to €574 million. Although the figure represented year on year improvement, it still fell short of analysts’ consensus estimate of €623 million as significantly higher marketing expenditure compressed margins during the quarter.

Rather than scale back promotional activities to preserve short term earnings, Adidas deliberately accelerated spending on innovation, sponsorships, athlete partnerships and global brand visibility, particularly around the FIFA World Cup.

Chief Executive Officer Bjorn Gulden defended the company’s strategy, insisting that the business remained focused on long term market leadership instead of chasing immediate profit gains.

He expressed surprise at the market’s reaction, explaining that Adidas intentionally adopted a conservative financial outlook while continuing to invest aggressively in strengthening the brand.

According to Gulden, reducing marketing investments simply to satisfy short term market expectations would have undermined the company’s broader growth ambitions.

Instead, he argued that sustained investment has enabled Adidas to capture additional market share while reinforcing consumer demand across multiple product categories.

Furthermore, the company continues to refresh its product pipeline as it works to extend the success of iconic sneaker franchises such as Samba and Gazelle, whose explosive popularity has gradually begun to moderate.

Consequently, Adidas is accelerating the introduction of new designs in a bid to maintain consumer excitement and stay ahead of intense competition from global rivals, including Nike.

Although World Cup sponsorship generated substantial commercial benefits, it also raised investor expectations to exceptionally high levels.

As a result, several analysts argued that the upgraded sales forecast did not go far enough to justify the elevated valuation investors had placed on the stock before the earnings announcement.

Analysts at Deutsche Bank described the quarter as fundamentally solid but suggested that expectations had become inflated after Adidas’ successful World Cup performance.

In addition, they noted that while the company increased marketing expenditure by about 30 per cent during the quarter, projected sales growth for the second half appeared less ambitious than many investors anticipated.

Similarly, analysts at Citi observed that although Adidas upgraded its annual revenue forecast, the revised guidance still fell below broader market expectations.

They warned that investors may once again question whether the company’s growth trajectory can remain strong once the temporary boost from the World Cup fades.

Despite the market’s sharp reaction, Adidas continues to outperform many of its industry peers operationally. Before Thursday’s selloff, the company’s shares had significantly outpaced rival Nike, supported by renewed investor confidence in its turnaround strategy and improving commercial execution.

Beyond its financial performance, Adidas also announced a key leadership transition. The company confirmed that Birgit Kretschmer will become its new Chief Financial Officer at the end of the year, succeeding Harm Ohlmeyer, who elected not to seek another term.

Overall, Adidas’ latest results highlight a company prioritising long term brand strength over short term profitability. While higher marketing investments temporarily pressured earnings and unsettled investors, stronger revenue growth, expanding global demand and an improved annual sales outlook suggest that the sportswear manufacturer remains firmly committed to sustaining its competitive momentum well beyond the World Cup.