Adidas Faces Q2 Slowdown but UBS Sees Long-Term Growth Potential

Adidas’ strong market momentum may be slowing after weaker-than-expected second-quarter results raised doubts over the durability of its turnaround. The sportswear giant reported a softer Q2 revenue, hit by sluggish direct-to-consumer sales, slower footwear demand, and ongoing challenges in Europe.

Investors worry the surge fueled by Adidas’ popular Terrace line and refreshed brand image may be fading. However, UBS says it’s too early to call the end of the company’s outperformance. While Terrace-driven growth has moderated, new product franchises are emerging to fill the gap. With product launches typically taking up to nine months to gain traction, UBS expects stronger contributions in the second half of the year.

Europe, the weakest region in Q2, may already be recovering, with July sales showing improvement and retailer sentiment staying optimistic. The U.S. remains a drag, but Adidas reiterated its outlook for double-digit growth across all other markets, representing roughly 80% of total sales. Foreign exchange hedging is also expected to support earnings through 2026.

UBS cautions that Q3 will be the key test for momentum. If new franchises can offset the slowdown in Terrace, the turnaround story could continue. At around 24 times 2025 earnings, Adidas is trading below the growth implied by its long-term guidance. UBS maintains a Buy rating with a €274 price target but warns that another weak quarter could quickly shift sentiment.

With brand renewal efforts underway and global demand pockets still strong, the coming months will determine whether Adidas can sustain its growth trajectory or face a sharper slowdown. For now, UBS believes patience is warranted, as the second half could still deliver for investors.