Adidas shares fall as World Cup promotions eat into earnings
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Frankfurt: Adidas shares dropped as the sportswear giant posted second-quarter profits that fell short of market expectations, with a steep rise in marketing spending for the FIFA World Cup impacting on profitability despite strong sales growth.
The company said revenue increased significantly during the quarter, owing to high demand for football jerseys, boots, and other World Cup-related products. However, huge increases in advertising and promotional expenses related to the tournament cut operating profit, disappointing investors.
Adidas raised its full-year sales forecast, citing strong consumer demand in key markets and ongoing growth in its core product lines. While the company remains hopeful about revenue growth, the earnings were lower than projected, prompting a dramatic sell-off in its shares as investors questioned the impact of rising marketing costs on future profitability.
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