Adidas Bets on Shareholder Returns and World Cup to Counter Tariff Hit

Adidas shares hit 52-week low on US tariff impact, slashing 2026 profit targets. Management counters with €1.5B capital return and pins hopes on 2026 World Cup revenue.

Adidas shares are trading near a 52-week low, but the company's management is fighting back with a substantial capital return program. The sportswear giant's stock, currently at €135.20, has declined 19.74% since the start of the year, hitting a recent low of €130.60 on Tuesday. This slump follows a sobering financial forecast for 2026, weighed down by new US import tariffs.

The core of the problem lies in Adidas's deep-rooted supply chain. Approximately 92% of its manufacturing is based in Asia, with Vietnam alone accounting for 27% of its global procurement volume. New US tariffs of 46% on imports from the region are now biting hard. Shifting the highly specialized production of performance footwear is not a short-term option, leaving the company exposed.

The financial damage is significant. Tariff costs and negative currency effects are wiping out roughly €400 million in operational improvements. Consequently, management has revised its 2026 target for operating profit down to €2.3 billion, a figure notably below the €2.72 billion analysts had anticipated. The goal of achieving a double-digit EBIT margin has also been pushed back to 2027 or 2028.

In response, CEO Björn Gulden and his team are deploying a dual strategy focused on shareholder returns and commercial momentum. To support the stock, Adidas plans an aggressive capital return package worth up to €1.5 billion. This includes a share buyback program of up to €1 billion this year and a proposed dividend of €2.80 per share, representing a 40% increase over the prior year. Shareholders will vote on the dividend at the Annual General Meeting on May 7.

Analysts are largely maintaining a positive stance despite the lowered guidance. An overwhelming majority, 22 out of 23 tracked experts, continue to recommend buying the shares. UBS recently reaffirmed its price target of €219. The market is now looking for tangible signs that operational headwinds can be offset.

The upcoming 2026 FIFA World Cup in North America is central to Adidas's commercial counterplay. The tournament is expected to generate an extra €1 billion in revenue. The company is banking on strong sales as the official outfitter for teams including Argentina and Spain. A particularly emotional driver will be the German national team, which will wear the three stripes for the last time at a major tournament after more than 70 years, before switching to Nike in 2027. Early sales of the new away kit suggest robust demand from fans and collectors.

The first concrete look at how tariffs are impacting margins will come with the Q1 earnings report on April 29. This release will reveal the extent of the initial damage and whether early World Cup-related sales are providing any cushion. A key challenge is timing: many retailer terms are already locked in, meaning planned price increases to offset tariff costs won't take effect for at least six months. Until then, the World Cup business must carry the load.