Adidas launches €1B buyback after Q4 profit doubles, sales surge 11%
Record 2025 revenues and historic gross margins drive German sportswear giant's return to shareholder returns
Adidas has unveiled a €1 billion ($1.07 billion) share repurchase program after preliminary fourth-quarter results showed the German sportswear giant's operating profit more than doubled and revenue surged 11%, marking a decisive turnaround for the company once weighed down by the Yeezy controversy.
The buyback, approved by the Supervisory Board and set to begin in early February, represents the company's first major capital return initiative since exiting its partnership with rapper Kanye West. All repurchased shares will be cancelled, mathematically boosting earnings per share—a move executives framed as a vote of confidence in sustained profitability.
"Driving double-digit growth in the fourth quarter and more than doubling operating profit made 2025 much better than we had planned and expected," said Bjørn Gulden, Adidas chief executive, in a statement accompanying the preliminary results. The CEO attributed the performance to "quality growth" characterized by disciplined product management, high full-price sell-through rates, and controlled discounting.
The numbers tell a story of accelerating momentum. Currency-neutral revenue for the Adidas brand jumped 11% in the fourth quarter, reaching €6.08 billion in euro terms. Operating profit soared to €164 million from €57 million a year earlier, while gross margin expanded to a historically high 51.6% when excluding Yeezy sales—a key metric indicating the company is successfully selling more products at full price.
Adidas joins a growing list of European companies deploying capital to shareholders as confidence in the region's economic outlook improves. The buyback will be financed through anticipated strong cash flow generation in 2026, the company said, rather than adding debt to the balance sheet.
Wall Street analysts have taken notice, with Adidas currently holding a "Moderate Buy" consensus rating. The average 12-month price target stands at $146.02, according to MarketBeat data, representing roughly 69% upside from the recent $86.42 share price. TipRanks shows an even more bullish outlook at $184.78, implying potential gains of more than 110%.
Recent analyst actions have been mixed, reflecting the stock's volatility throughout 2025. Bank of America downgraded Adidas to Underperform in early January, cutting its price target to €160 from €213. Meanwhile, Grupo Santander initiated coverage with an Outperform rating and €212.20 target, while Bernstein raised its target to $146.02 from $127.09.
The buyback announcement caps a remarkable recovery for the heritage brand, which grappled with inventory management issues and the sudden termination of its lucrative Yeezy partnership in 2022. Gulden, a former Puma CEO who took the helm in 2023, has emphasized product innovation, clean inventory, and rebuilding retailer relationships as pillars of his turnaround strategy.
Looking ahead, investors will focus on Adidas's full 2025 earnings report scheduled for March 4, when management is expected to provide detailed financial guidance for 2026 and outline future capital allocation plans. The company signaled confidence in continued growth across its sport, comfort, lifestyle, and fashion product categories, with ambitions to gain market share globally.
The buyback program also represents a shift in capital allocation strategy for the German company, which had prioritized rebuilding its balance sheet following the Yeezy exit. By returning cash to shareholders through share cancellation, Adidas is effectively signaling that it views the worst of its restructuring as complete.
In the competitive athletic apparel market, Adidas's performance contrasts with ongoing challenges at some rivals. While Nike has faced pressure from inventory buildup and slowing growth in North America, Adidas's focus on full-price selling and margin expansion appears to be resonating with both consumers and investors.
The €1 billion buyback represents approximately 2-3% of Adidas's market capitalization based on current valuation levels, a significant but not aggressive allocation that leaves room for continued investment in product development and marketing—a critical factor in the brand's fight against Nike and emerging competitors like On Holding and Hoka.