Executive Summary

• Adidas unexpectedly announced preliminary results for 2Q16 and raised its FY16 sales and profit forecasts. The 2Q16 results widely beat analysts’ estimates, and Adidas raised its profit forecast for the fourth time this year.
• Sales in 2Q16 received a boost from the UEFA Euro 2016 soccer tournament and from an early termination payment to end the company’s sponsorship deal with England’s Chelsea soccer club.
• Total 2Q16 revenues increased by 13% year over year and by 21% on a constant-currency basis, to €4.4 billion, in line with consensus.
• As a result of a higher gross margin and operating expense leverage, the company’s operating profit increased by 77%, to €414 million, in 2Q16. Net income from continuing operations increased by 99%, to €291 million, in the quarter, easily beating consensus of €206 million. Adjusted basic EPS doubled, to €1.45, year over year, and far exceeded the consensus of €1.01.
• Adidas did not provide a sales breakdown by brand or geographic region.
• The company will report detailed 2Q16 earnings results on August 4, 2016.