Adidas’ World Cup Win Comes at a Cost as Q2 Marketing Spend Tops $1 Billion

The numbers

14% – year-on-year revenue growth in Q2, with net sales reaching a record $7.7 billion (€6.74 billion).

$243 million (€212 million) – additional marketing spend in Q2, up 30% from a year earlier, driven by FIFA World Cup campaigns and activations.

$1.05 billion (€924 million) – total marketing bill in Q2.

$658 million (€574 million) – operating profit for the three months to June, below analyst estimates.

17% – how much Adidas shares tumbled after the earnings release, marking its biggest daily decline on record.

Watercooler talk

As it posted record quarterly net sales, Adidas chief executive (CEO) Bjørn Gulden said its Timothée Chalamet-fronted World Cup campaign “brought back the love” for soccer among fans.

Official FIFA sponsor Adidas, which also sponsored 14 national team jerseys, sold four times more jerseys and twice as many balls as it did during the 2022 Qatar World Cup, generating event-related sales of around $1.7 billion (€1.5 billion).

“This World Cup was like a fairy tale for me,” Gulden said in a statement to shareholders.

However, despite bumper numbers and an Oscar-worthy ad, shares tumbled by 17% on Thursday (July 30), after the bolstered marketing investment weighed heavily on profits and disappointed investors.

The business boosted its full-year revenue growth guidance to 9-10%, but its profit guidance remained unchanged at around $2.6 billion (€2.3 billion).

Revenues rose double-digit in all regions, except Europe. Apparel revenues grew 35% in the quarter, while footwear sales increased 1% and lifestyle sales were up 2%.

The World Cup has emerged as a bright spot this earnings season, with McDonald’s and Unilever also crediting it for driving stronger sales and marketing returns.

Key quote

“Our marketing campaign, ‘Backyard Legends,’ brought back the love for the game the way we used to play it in the streets,” said Gulden.

“The products with jerseys, culture wear, footwear, and balls showcased what Adidas football should look like, and we also sold much more than ever before. Seeing two of our teams, Argentina with Messi and Spain with Lamine Yamal, playing the final was unbelievable,” he added.

“That they played with our Adidas Trionda ball and that also the referees for the first time in history wore Three Stripes came on top. We could not have looked and performed better. I think even Adi Dassler would have been proud.”