Adidas Bottoms Out: Reheating Old Hits Beats Superstar Collabs
After nearly halving from its 2021 peak, Adidas engineered an earnings recovery by thawing out its retro sneakers, repairing its wholesale partners and holding inventory on a tight leash — but the share price rallied and then fell back again, showing that the sportswear cycle is really a game played between inventory and expectations.
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The share price bottomed out before the brand's reputation did
The turn in how people talk about Adidas this year came out of a run of good news: new-Chinese-style clothing went global over Spring Festival, the top two men's elite finishers at the London Marathon both ran sub-two and all of the top three wore Adidas racing shoes, and in the World Cup final between Spain and Argentina the side that ended up lifting the trophy was wearing Adidas kit. What came back earlier than the chatter was the share price. It peaked above 300 euros in July 2021, fell all the way to close to 100 euros, recovered to above 255 euros, and has now dropped back to around 160 euros — nearly cut in half against the high, but up 60% off the low. That history is the coordinate system for the five-year post-mortem that follows.
The slide started with goods stuck in transit, not with nobody buying
Adidas outsources production, and it takes eight to nine months to get from a design to a shelf. In 2021 global ocean freight had not recovered and its Vietnam base kept halting production at short notice, which pushed in-transit inventory as a share of the total from close to 29% in 2019 and 28% in 2020 up to 38.8% in 2022. Months of supply in the second half of 2021 fell to just 2.21 months, which tells you the goods were stranded mid-route and stores were badly anxious about running out. At the same time Greater China stalled for its own reasons: the region still grew 37% in the first half of 2021 and made up 23% of global revenue, then declined for two straight years, with its share falling to somewhere between 12% and 15%. A logistics blockage stacked on top of a core market sliding — that is where the fall begins.
Adidas never destroyed the Yeezy inventory; it sold it back in three drops
Adidas and Kanye West had worked together since 2006, launched Yeezy in 2015, and by 2020 and 2021 the line was contributing 1.7 billion dollars of sales a year, about 8% of company revenue, with a profit contribution that may have been on the order of 40%. In October 2022 Adidas terminated the deal over Kanye's improper remarks; upstream production could not react quickly, and the company took a write-down provision against 1.2 billion euros of finished and in-transit inventory. What followed was not a one-off destruction: it re-released part of the inventory in three separate drops across 2023 and early 2024, donated the remainder, and even booked a reversal of the write-down loss in its results. The handling was judged, in hindsight, to have worked out well.
Leaving Russia bruised sentiment on the stock, not the business
In 2022 Adidas also dealt with the Russian market: it suspended operations in March and exited completely in October. Russia had historical roots for Adidas — it did business in the Soviet Union during the Cold War and sponsored the Soviet team at the Moscow Olympics, and in 2012 the then-CEO called Russia one of its fastest-growing markets. But by 2022 the business had already shrunk, and closing it down brought a loss of about 300 million dollars. The impact on the business was limited; the impact on sentiment around the share price was one more negative layer. In 2022 Adidas was fighting on three fronts at once — China, Yeezy and Russia — which makes it fair to call that its hardest year.
The retro lines fixed on day five paid off better than Yeezy
In 2023 the new CEO, Gulden, arrived from Puma and handled the thorniest problems smoothly: rather than destroying the Yeezy inventory he sold it off in batches, and he cancelled the plan to push hard into direct retail, switching instead to helping wholesale partners improve the quality of their inventory. He also made three retro lines including Samba a company-level strategy, signing off on it on his fifth day in the job. The retro models got bought up by a new generation of young consumers through celebrity street shots and TikTok, and compared with Yeezy, reheating retro styles offered a better return on investment and lower risk, while covering part of the lost Yeezy revenue. Company revenue still fell in 2023, but gross margin and free cash flow recovered, with Greater China's second-half gross margin close to 70% — by then the signs of bottoming out were unmistakable.
In an Olympic year the smartest move was not to stockpile
2024 was the year of the Paris Olympics, and historically Olympic years tend to turn into big inventory years — but Adidas did not use the occasion to build stock, holding months of supply to around two and a half months. Footwear and apparel sales were fine-tuned in their weighting, with footwear's share dipping slightly in the second half. Gross margin returned to 51% in the first half of 2024 and free cash flow improved. R&D expense reached 170 million euros, the highest in the past 5 years, funding technology work such as racing shoes. The sub-two shoe weighs no more than 100 grams each, with a thick but flexible midsole, sacrificing durability for times — closer to an advertisement for the technology than a product. Adidas is more conservative on R&D than Nike, but it also knows technology is the real selling point.
What is holding the stock back is not Adidas but the second tier
The share price rebounded to 255 euros in early 2025, then fell back to 160 euros without turning into a genuine reversal. The reasons: months of supply has climbed back to 2.6 to 2.8 months, and revenue growth and gross margin have edged down; retro sneakers are a fashion item, and once a buying wave has passed people want something new; and, more importantly, the competitive structure of the sporting goods market has shifted, with second- and third-tier brands rising and eating into Nike's and Adidas's market share — which may be the main reason the share price has not returned to its high. Revenue growth in North America and Greater China both returned to double digits in the first half of 2026, and the profit recovery in Greater China is striking, so the numbers are in fact good; the market just wants something new.
Sportswear has its own hog cycle, but marketing can rewrite it
This post-mortem invites a comparison with the hog cycle: sportswear fundamentals are set jointly by big events such as the World Cup and the Olympics, and at the core sit inventory levels and the ability to adjust them. But athletic footwear and apparel differ from a staple like pork, in that brand and marketing capability can improve the cycle's effects. From the share prices, the highs for both Nike and Adidas came in 2021, not because business was astonishingly good but because excess global liquidity pushed valuations up. Adidas's share price recovery ran more than half a year ahead of its fundamental repair, which shows the market does correct its mistakes in advance. That is also a reminder not to be bullish because it is rising and bearish because it is falling: judging a company by which way the stock moved means missing the chance to watch how it actually recovers.
In their own words · checked verbatim
How should I put it? Against the high it's almost cut in half, but against the low it's up 60% again.
怎么说呢？相比高位是接近腰斩，但相比低位又涨了60%了。
Everybody knows you're just reheating yesterday's leftovers, but those reheated leftovers still sell — and that matters a lot.
就是所有人都知道你就是在炒冷饭，但是你这个炒过的冷饭依然能卖得出去，这个事情也很关键
When you're at the bottom, the base is fairly low. Later on, going after that same growth rate actually gets very hard.
你在谷底的时候，这个基数会比较低嘛。你在就是在后面你再追求同样的增速，其实难度就会很大。
A lot of brands that used to sit in the second and third tier have shown enormous ambition and a very strong ability to expand.
原本很多在第二第三梯队的品牌展现出了很大的野心和很强拓展能力。
Figures
| Adidas all-time high share price | above 300 euros | 2:09 |
| Adidas share price low | close to 100 euros | 2:09 |
| Adidas share price recovery high | above 255 euros | 2:09 |
| Current share price (at time of recording) | around 160 euros | 2:09 |
| In-transit inventory as a share of total (2022) | 38.8% | 4:10 |
| Greater China revenue growth, H1 2021 | 37% | 6:14 |
| Yeezy annual sales contribution | 1.7 billion dollars | 9:19 |
| Yeezy share of profit contribution | about 40% | 9:19 |
| Yeezy inventory write-down | 1.2 billion euros | 10:19 |
| R&D expense, 2024 | 170 million euros | 20:49 |
Glossary
- Samba
- A classic Adidas retro sneaker with a T-shaped leather toe overlay, back in high demand on the retro-athletic fashion wave.
- Months of supply
- Inventory divided by average monthly sales over the past six months, measuring how many months of selling the stock on hand can support.
- Write-down provision
- A loss provision taken in advance against inventory likely to go unsold or lose value, booked as an expense in the current period.
- Sub-two
- Running a marathon in under 2 hours, once treated as the outer limit; at the 2025 London Marathon more than one runner did it for the first time.
How to listen
Investors and consumer-sector analysts who follow the sportswear cycle and inventory management, plus anyone working at or around Adidas and Nike, who will find in this five-year recap a real case of company decisions and share price falling out of step.
The World Cup and new-Chinese-style recap at 0:00-0:53 can be skipped; start straight from the 2021 post-mortem.