Adidas: Initiation of Coverage- Can Hyper-Localization & Lean Supply Chains Turbocharge Profits?

Adidas AG recently reported its first-quarter results for 2025, revealing a stronger-than-anticipated performance, particularly driven by robust product launches and effective market operations. Key figures include a 13% increase in net sales currency-neutral, with the Adidas brand alone experiencing a 17% increase when excluding its discontinued YEEZY line. Gross profit improved by more than 100 basis points, underscored by a sales growth that allowed for minimal discounting. Impressively, Adidas achieved an EBIT of €610 million, which reflects a 400 basis point improvement compared to the previous periods. The improvement in financial performance is setting a target of achieving a 10% EBIT margin as reflective of their business strategy for the midterm, although not for the current year.