Adidas experienced a sharp decline in its share price following the release of its second-quarter financial results, which showed higher-than-expected marketing expenses tied to the FIFA World Cup impacted profitability despite strong revenue growth. The German sportswear company reported a 14% increase in revenue for the April to June period, reaching approximately €6.7 billion ($7.7 billion), driven partly by heightened World Cup promotion and product demand.

The quarter’s operating profit rose 5% to €574 million, falling short of analyst forecasts of around €623 million. This profit miss was largely attributed to a substantial 30% increase in marketing spending, totaling about €212 million, related to the World Cup campaign. Adidas invested heavily in global marketing initiatives, including a high-profile multi-minute advertisement featuring celebrities like Timothée Chalamet, Lionel Messi, and Jude Bellingham. The company also sponsored 14 national teams at the tournament, including finalists Argentina and Spain, and supplied various official match elements such as the competition ball and referee kits.

Despite the profit shortfall, Adidas maintained its full-year operating profit target at approximately €2.3 billion, though this figure remains below some analysts’ expectations of around €2.5 billion. The company expects full-year revenue growth of 9 to 10 percent on a currency-adjusted basis, an upward revision from prior guidance for high single-digit growth. Adidas highlighted that the World Cup sales surge included record jersey sales—over 17 million worldwide, quadrupling the volume sold in the 2022 tournament—with Mexico accounting for the largest individual market.

Adidas Chief Executive Bjørn Gulden described the World Cup period as a “fairytale” success and noted the effectiveness of the “Backyard Legends” marketing campaign, which aimed to reconnect consumers with grassroots football. The company also pointed to intensified product availability and strengthened relationships with retail partners as contributing factors to sales growth. In the U.S., foot traffic to Adidas stores rose significantly during the World Cup group stage, with data showing a 44.7% year-on-year increase in visits in mid-June.

However, investor reaction was negative, with shares falling as much as 19% during European trading before closing down 11.5%—one of the steepest one-day declines since Adidas’s 1995 public listing. Some market analysts expressed concerns about the sustainability of growth following the World Cup spike and pointed to broader competitive pressures from fast-rising brands like On Running and Deckers, as well as Nike’s renewed athlete-focused strategy under its new CEO. Analysts also noted internal company developments, including the CFO Harm Ohlmeyer’s decision not to extend his contract, with Birgit Kretschmer slated to assume the role later in the year.

While the headwinds from increased marketing expenditures dented near-term profitability, Adidas remains confident in its strategy and the long-term benefits of World Cup visibility, particularly as it seeks to close the gap with competitors in key global markets.