Adidas is seeing a big football boost, analyst says

Adidas (ETR:ADS) is benefitting from on-trend “brand heat” for its Terrace lines, amidst the UEFA Euro 24 championship, that’s according to analysts at Deutsche Bank.

The ‘Terrace’ trend is continuing and is likely to be bolstered further by the football-related apparel sales, analyst Adam Cochrane highlighted.

“The positive Terrace impact will be felt across most regions and in the gross margin,” he said in a note.

Adidas’ terrace lines include retro designs, particularly those based on the European football culture of the late eighties and nineties – including the likes of the iconic Gazelle, Samba and Spezial trainers.

Cochrane added that the DB team expects to see Adidas report second quarter sales growth pushing toward 10%, which would be a big step up from the 5% seen in the year’s first three months.

The positive trend will likely be offset in year-over-year comparatives somewhat, however, as 2023’s numbers were supported by Yeezy sales.

Looking ahead to Adidas’ half year results, due in late July, the DB analyst said: “We believe investors will focus on the improvement in the underlying sales growth towards 10% and a sequential improvement in the second half.

“There is some noise from the annualisation of Yeezy but we view this as increasingly less relevant to the investment case.”

Cochrane added: “We are yet to see the benefit from a resurgent US wholesale market as the retailers start to restock inventory.

“Adidas is seeing an increase in marketing spend in the period and is benefiting from sales leverage to help offset inflationary pressures.”