Ladies and gentlemen, welcome to the adidas AG Full Year 2025 conference call and live webcast. I am Moira, the conference call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Sebastian Steffen, Senior Vice President, Investor Relations, Corporate Communications and Corporate Strategy. Please go ahead.
Yeah, we just realized it's a long title. Thanks very much, Moira. Good evening, good afternoon, good morning, everyone, wherever you're joining us today. Welcome to our full year 2025 conference call. Our presenters today are our CEO, Bjørn Gulden, and our CFO, Harm Ohlmeyer. I know that there's a lot to talk about today. We will kick it off in a second with Bjørn and Harm, who will provide the details for 2025.
They will be sharing with you our operational and financial highlights for last year, present our outlook for 2026. Of course also talk about our outlook for 2027 and 2028. For the following Q&A session, I would like to ask you to please limit your initial questions to two to allow as many people as possible to ask their questions. Thanks very much. Now before I hand over to Bjorn, we will of course kick it off with a video.
You said you were gonna be a star. Think faster, be smarter, adapt quickly. In 2025, we pushed ourselves even further to be the best sports brand in the world. Don't believe me? Fine. Continually innovating. We're building on 50-plus years of adidas knowledge. For sport. Adizero Dropset Elite. Our first truly hybrid racing shoe. Style. She looks good. She feels comfortable. Strong, sexy and comfort. The hype of the shoe is off the charts. The Predator Edge. I need this shoe. From the pitch. The winner of the 2025 Heisman Trophy is...
To the streets. They are perfect. New Hellstar collab with adidas. We are sport. We are culture. This is the best feeling in the world. We are everything in between. Meeting consumers' needs locally. We are! adidas! Seeing results globally. Where are my Superstars? Creating the best for the best. We are gonna need more. They have tremendous talent on the adidas roster. Celebrating sport. Another Superstar crosses the line. The three stripes everywhere. Believe that.
Yeah. Hello, also from my side. I'm sure you have spent some time looking at our numbers already, but I think in the interest of all of us, I'll take you through the story that I think we have achieved in 2025, and then we will talk 2026 and even a little bit further as we go ahead. As a sports romantic, I have to remind you again that in a very complicated world, with many negative things, there are also great sports events. I do think that the Winter Olympics in Italy was one of them, and we felt that our athletes and our teams did very well. Don't forget that I'm a Norwegian, so I have to remind you all the time who's on the top.
Also tell you that I'm extremely proud of being Norwegian when it gets to sport. I also remind you that the Paralympics is starting in two days, which is also a very important sports event, and I hope all of you have a chance also to support that. When it links into our plan, you remember that 2025 is the third year that we work together. We promised you that we would be a good company in 2025. To be very honest with you, when I look back, I think actually 2025 was a fantastic year for us. Not only in the numbers that we will get to, but more with what the brand achieved for visibility, performance, product, and actually showing that we are a good company.
I think this is what adidas has always been. When you look from the outside in, and you look what people are looking at, adidas has been and is a very, very good company to work for. I think you see that when we achieve a lot of prizes from the outside and not prizes that you can buy, but actually prizes where people look at you in competition with other companies. I can also say that at my age, looking at all the young people who wants to work for us, it's obvious that we currently are an attractive company to actually be associated with. It is also important for us that although there is a focus on, of course, the numbers, and there is a focus on many things, we also wanna be a citizen.
We look at that for what we do for the planet, environment, and also, of course, how we work on the human rights side. You've probably seen from the targets that we are achieving them, and we will continue to do things as a good citizen that will make the planet and the world a better place, because I do think that's still important in a, as I said, pretty complicated world. It's also important to look at that we actually have 64,000 employees that works for us directly. If you then take into account suppliers and everything, you talk about more than 1 million people. Of course, we have a great responsibility as a company. When you know that we have 180 nationalities employed, then you also know the task.
With different culture and different backgrounds, we have a huge responsibility. I'm also proud of knowing that we now have 52% of our workforce being female, to 48% male. Not because it's a target, but actually it showcases the evolution of this business. Again, I think I can say that the female consumer is now more important than the male consumer, and it's good to see that the company is also moving in that direction. Although in some parts of the world, gender equality is not something to be measured and talked about, we actually do, and it's nice to see that 41% of our leadership are now women. We do believe that in the next years that will increase.
If it's 50% or 48 or 52, it doesn't really matter, but we should be a company that has gender balance, not necessarily because we have to, but actually because it makes sense to be a good company making the right products and concepts for our consumer. If you then go into when you are interested in the numbers, again, I'm probably just repeating what you already know, but Q4 was also better than we had expected. As you can see, we grew 11% currency neutral for the adidas brand in Q4. Remember that we're also comparing against the year before where we had Yeezy, and there's a one percentage difference in those numbers.
Especially proud is, of course, that we had a more than 50%, almost 51% gross margin in Q4, which is normally a quarter where you lose margin. That showcases again that the quality of our sales was very high in a pretty, I would say, discounted and volatile market. That gave us a profit of EUR 164. That is almost up three times what we had last year. Remember that Q4 is always from a profitability in our industry, especially for us, but also for other company, almost a break-even quarter. Again, that's why we were very happy with that result. That gave us then the 13% growth. When you look at the adidas brand, the 3% difference to the 10 is of course the old Yeezy, and that's a sale of almost EUR 25 billion.
A gross margin approaching 52%, which I think is all-time high without Yeezy. A profitability on an EBIT level of EUR 2.056 billion, which is up 54%. To be honest with you, higher than what we would have expected both one, two, and three years ago. When you look at where the growth is coming from, the left side is Q4, and the right side is the full year. Even in North America we grew 10%. I think we've said it many times, our focus going forward is of course to improve our business in the U.S. We are not by far where we should be, and that's not necessarily due to the American team, but more us as a company.
We will talk more about that as we move ahead. Europe, after two fantastic years with growth, another one at 10%. Of course, Europe, we have much higher market share, and we are market leader in many markets. The growth here going forward will probably not be at the level that in other regions, but a very, very strong performance. Again, it should be like that since we have our headquarters sitting in the middle of Europe. Greater China, another year, up 13. Very happy with the development of the business and the team. I think you also start to see a lot of influence actually of the Chinese organization in other parts of the world, and we'll get back to that when we talk about the product.
Japan and South Korea, the same, growing at 14%. We used to be market leader in those markets, we are gaining share. Same thing here, very, very happy with the development. LatAm has been on fire for the last two years. We are market leader in the region and in most of the countries, again, growing at 22%. Emerging markets, which again, you know, are in a very, very tough situation. Remember that they are responsible, I think, for 72 different countries. Right now sitting in Dubai as organization and looking into the terrible conflict that we have in the area. Happy to report that no one is injured, of course, they're having a terrible situation, many of them sitting in shelters.
We also had one franchise store was actually being hit by a rocket and destroyed. Again, I am very proud of the team and also, of course, maybe not so important now, but the performance in 2025 being up 17%. That gives us then an 11% growth in Q4 for the brand and then 13% for the full year. We talked about the channels every time we speak. You see here a very balanced, what should I say, growth in wholesale, own retail, which is brick-and-mortar, and e-com. Happy to report that we comped in our full-price stores and in our factory outlets, and we added around 90 net stores during the year. I think we opened 247 new ones and we closed 158.
Growth both on the like for like, which is important, but also expanding into better stores. You see the e-com, very, very good development. Again, our global e-com team working very well with the markets, and we are slowly becoming a very good e-com operator again, which I think adidas used to be. That gives us the famous 60% wholesale and 40 D2C. I think we told you about that already three years ago. Own retail, meaning brick and mortar at 23 and e-com at 17. It's not a goal in itself to be 60/40, but that's actually mathematically what happens with the geographical mix we have. As I said before, there are markets that will be more e-com because that's, you know, the distribution. There will be markets that will have more D2C.
Again, depending on the growth rate we have in the different parts of the world, this, what should I say, ratio might change, but we actually do believe that 60/40 is very healthy currently. Same thing here, you know, because we repeat it again and again, that our markets should adopt retail concepts that fits into their market, both from a cultural and architectural point of view. You see here stores around the world where the storefronts are not the same, because we don't want to have all the stores look the same. We want to look great in the market. That's also what we feel the teams are doing. The same thing goes actually, believe it or not, for e-com. The pipes are global, meaning that the buildup of the sites are the same.
They have access to all the same content, but it probably makes sense, as you see here, that we're using different celebrities or different culturally relevant persons to market, the same things in the different markets. The local teams, again, adopt them to optimize the performance of the sites in the different markets. Exactly the same logic in the digital world as we do, in the physical world. When it gets to the divisions, we have said in the three years that we need growth and lead in footwear. You can see here again, growing 12%. We also said that there is a time when apparel needs to get into the lead because the visibility of the brand and the chances to actually build brand heat on apparel has been around the corner.
You have seen an accelerated growth in apparel during the year. I'm very happy then to showcase that we actually grew apparel during the full year at 15%. Accessories, building the growth. Remember we told you that we had some issues in sourcing for the U.S. market, meaning that we were negative in the last quarter. The U.S. business is now flattish, so we have sorted out some of the problems. Then globally, especially accessories that are linked to FIFA World Cup, especially balls, are highly up. You should expect this number to continue to actually be positive during the quarters of 2026. That gives us the 58% footwear, 35% apparel, and 7% accessories. Again, a very healthy growth, where the, what should I say, most of the business then being in footwear.
You should expect that apparel growth rate could be actually higher than footwear for a period. That is probably also what will be best for our P&L, at least, short term. Our performance business now growing at 15%. Mathematically, you will then understand that performance grows quicker than lifestyle, which again is positive. You know, sometimes lifestyle will grow quicker and sometimes performance. In the long run, it is of course, important that we establish a very solid performance business in all categories, being both the global ones and the local ones. Important here, football, our DNA growing at 12%. I think it's fair to say that wherever you research, you will probably agree that we now are the market leader again in football. Running, coming, of course, from a lower base, but accelerating the growth.
I think the Q4 quarter had a growth of 36%, so that means 29% for the full year. Training, you know, becoming a real growth vehicle again at 13%. Basketball, negative through the first three quarters, but then positive in Q4. Now that is also growing. Outdoor a little bit better than flattish. Golf slightly down. You know, I think that's following the market. Specialized sports, which also are there for sports marketing visibility, growing at 12%. The U.S. sports then being up 9%, following the growth in the U.S. market. A very solid, I would say, pattern for our performance business. We told you, I think, since a year that the four categories we need to win in globally is football. It's our DNA. Running, because it's the biggest category.
Training, because it's important, because globally every, what should I say, consumer trains. It might be different way of doing it, but very important for us. Basketball, of course, because of the cultural relevance in the U.S., but also globally. I hope and think you agree that our football business did extremely well in 2025, not only from the 12% growth, but also from the visibility, and the way we looked, and of course, also the way our teams and players, what should I say, performed. I am very proud to say that adidas is back again as a leader in where adidas was probably the pioneer in the industry. Running for three years, we've said it has of a priority.
We spent a lot of time establishing credibility again, signing athletes, developing, you know, the best performance shoes that exist. We are winning a lot of races because we have the best athletes and the best shoes. Extremely proud of what we did in the majors. You know there are six majors, so you can win 12 times in the two genders. We won more than half of them. Not only did we win, we were on the podium, I think, in all of the majors. It wasn't only in 2025, it started now also in 2026. The first marathon was now in Tokyo, and our male runners were one and three with Tadesa and Alex. In women, we were two and three, so we took four out of six podium places.
Again, showcasing that our product is really, really, really good. In running, again, the Adizero range is for those people who like to run fast. It's been, you know, the credit builder, credibility leader. We then said that we will take the look and bring it into a normal runner, and we did that with the Adizero SL. Maybe the most seen running shoes in the market right now. The volume on the shoe is approaching 10 million pairs. It's been a very successful, what should I say, launch and execution. We have then gone further with the everyday runner, with Supernova modern version, a really, really good franchise for normal people like myself.
Where we have not been competitive is in what we call comfort running, which we will talk about later, but that's where we're launching Hyperboost in the next couple of weeks and months as the most comfortable foam that you can find in the industry. We talked about training. As I said, there's many versions of training and people train differently in different regions. We have seen a huge development in so-called hybrid training, and therefore we have signed a lot of athletes, and we have built special product for hybrid training. Hybrid is, of course, where you combine running, cardio with strength.
It is then logic that we take a running shoe and we combine it with a strength shoe, and that's what we've done with the Adizero Dropset, which has tested fantastic and has a huge order book for the next season. As an example of how serious we take this, we actually almost build a hybrid stadium in our brand center. Last week, we had both the world-class athletes, many world champions together with our own employees, then doing a full competition in our facilities. Again, it showcases how great it is to work for a sports company like ours when you can do these things.
A great engagement, and many of our people were really exhausted, which was cool to see. We also see a clear, what should I say, development, in the training fitness area for her, where there is a blend of lifestyle, fashion and sports, and you have seen many collabs happening in the market. We do, of course, also do collabs, but I think the best collab we do is that we actually are now doing original sport where we take the three stripes and the original, what should I say, fashion direction, and we do it with the functional, performance fabrics. The pictures you see here is examples of it. I don't need to tell you that the reaction from the trade actually globally has been extremely positive.
We see this as a game changer for us in the women's training area. It might be that we will also see similar development on the men's side. Basketball. Yes, we know that we have not been competitive compared to our biggest competitor, and there is a huge way to go. Again, the new team who has been in place for about 12 months have been game changer. We have built a lot of new products. We have an innovation pipeline. When you look at the players at the All-Star weekend, you know, Anthony Edwards was named MVP VJ Edgecombe won the rookie MVP Damian, although he's injured, even won the three-point contest. Again, the visibility of adidas in All-Star was great.
I know that both on the performance shoes, the signature shoes and the lifestyle, there is a lot of good expectations in the market about our product. Motorsport, we have one year behind us with the relationship with Mercedes-AMG Petronas. Successful both, the way we look, the way we produce content, actually the commercial side of it is more than EUR 100 million. We achieved all, what should I say, the targets we have, are very, very close to the two drivers and the team in developing new products for the future. You know that we added our neighbor. I mean, the Audi headquarter is 100 km from here. When they went into Formula One, it was a natural thing that we do it together. They debut in Formula One next week.
The reaction to the range has been great. The two drivers have been here many, many times. We will then have two, I would call them German-rooted teams together with adidas and Three Stripes in the Formula One circus, and we really look forward to that, knowing that the merchandise, the fan base is increasing, and it's a good thing for our brand, both from an image and from a commercial point of view. In the, what should I say, footsteps of Adi Dassler, we are back again focusing on many, many local sports and also smaller sports, both to get credibility and visibility. That also goes into the U.S. Yes, we have a long way to go to be a real, real sports brand in the U.S.
And of course, we would like to have more college teams, and we would like to have more athletes, and we would like to have leagues, but it takes a while. But I think it's extremely cool to see that we have both teams in the NCAA final. You know, when Indiana beat Miami, all the players in adidas, that was a great feeling. But it wasn't only there. You know, we also won the volleyball tournament, and we won the NCAA soccer. And again, this showcases again that our sports marketing people in U.S. now have the freedom and the resources to do what is right for the American market, and that will of course continue, although we all know that it will take time to get the visibility and credibility that we need to be fully competitive in that market.
This page is probably the one I'm mostly proud of because three years ago, people said that adidas didn't have the right product and they didn't have, you know, performance product. I would say that we are more than competitive in all sports we compete, you will see that on this page. Our product people, our development, design, and innovation people are as good as anybody else, if not better. I'm very, very happy with the pipeline of product that is currently hitting the market and actually a little bit proud of it, which I think is in line with what Adi Dassler would have wished from us. Same thing in apparel. It is important for us that our athletes look good, feel good, and perform well. It's the same thing there.
We are innovating and investing in product development in all the sports we are in. I would say in 99% of the, what should I say, situation, we also look good. There was a couple of things that wasn't that good, but that will always happen. Back to innovation. Innovation is, of course, an investment where people are allowed to try things that haven't existed before. We have, you know, quite some innovation when it gets to foam, when it gets to carbon, when it gets to how to treat it. You see it here with actually with oxygen and the coldness. We are working a lot on additive or printed, and we're very, very close to actually launching performance shoes that are printed. We are working both with heating and with the Climacool systems.
There are some really interesting, what should I say, technologies now coming out also in apparel when it gets to fit, compression, and also Climacool. Again, same thing here. A lot of very, very energetic innovators that we give the freedom also to bring people or bring product to the market. Sometimes, like you see here, you know, we were able to take together with Mercedes-AMG product to the, what should I say, to real activities and set world record. You know, Sibuso running 5:59:20 on a 100 K in a very, very good documented, what should I say, event. An enormous effort from, of course, the athletes, but also from our own people and from Mercedes-AMG. Again, showcasing something that you can see online. It's a very, very emotional project.
Out of that, you will see many products that will also go commercial. Then I mentioned comfort. I personally believe that comfort is something that we and other sports brand maybe haven't focused enough on. We do know that some brands have had tremendous success focusing on comfort. Now we are at the point where we also focus on it. On this slide, you see a lot of footwear models that has been, you know, designed and developed with comfort in mind. The most important thing there is, of course, the new Boost foam, which is HyperBoost. You remember probably that Boost, you know, was the most comfortable foam in the industry. Shoes like NMD and UltraBoost, but also the most successful Yeezy shoes all had Boost in them. Boost had one problem.
It was too heavy. That's why our innovation team had the brief since three years to develop Boost, but to be much lighter. The answer is Hyperboost, 40% lighter than the old Boost and therefore a performance foam, extremely comfortable and light. You see here some of the silhouettes that are on the way of hitting the market, both in performance but also in lifestyle. That was performance, you know, growing at 15%, lifestyle growing at 12, and you see both originals and sports were growing double digit. I think that you would agree that we have partners that are extremely relevant on a global scale. You see some of them here. I mean, newly signed Kendall Jenner. I mean, we know about Grace and the other ones I probably don't need to present.
I hope that you saw Bad Bunny at Super Bowl halftime. I think it's the first time in the history where, you know, the halftime show was dominated by one brand. Not only him wearing his own shoe, the BadBo 1.0, but also the dancers being, you know, in three stripes. Again, very, very proud to see that halftime show, but also proud to see that the shoes blew out very quickly. Of course, there will be releases now in different colors around the world that you can actually buy. Same with our, what should I say, very close relationship to Pharrell. His own development with, of the Jellyfish was Shoe of the Year in the U.S.
You will see his design direction both on the high end and the more commercial, rolling out in different versions and colors. Here you see the X LG, which is already doing very well in the U.S.. Again, lifestyle, yes, there has been a lot of talk about, you know, our Terrace, the Samba, Gazelle, and Spezial. I think you now have to widen it because all the shoes you see here from the Samba all the way down to running and actually soccer culture shoes are selling at quite some high volumes everywhere. I think right now, it is important to extend the range globally, and not forget that the Terrace product is actually continuing to be very, very strong.
I would remind you that the Stan Smith is a look that you will see more and more of at the back end of 2026. I don't think I'm wrong if I believe that you and maybe your kids would like to wear a Stan Smith in 2027. There are very clear indications that that is going to be a big shoe. Of course, you're also allowed to carry any of the other shoes. Apparel, we did talk about the need three years ago to innovate in apparel. Three years ago, most of our lifestyle product, both in Originals, and in sportswear were fleece. Now you see denim, you see satin, you see knit, and you see completely new design elements.
A great job from our apparel team. I don't need to tell you that right now, many of these products are really flying off the shelf. Especially online, where some of the good online players are really, really able to showcase newness and freshness all the time. We continue to see Three Stripes, you know, dominating the sportswear side. Again, Three Stripes may be the most known element of any sports brand in the world. It's fair to say that we now have a run on Three Stripes and we try also, of course, to do that in a very, very, what should I say, adidas-like way.
Taking care of it with not overdoing a bit, but at the same time showing it in many innovative way. I think with that, I've tried to tell you the story of what's going on with the brand, and then I'll hand over to Harm, that Harm can actually do the details of the numbers.
Thank you, Bjørn, ready to break now for a couple of minutes as I go through the financial update. Good morning, good afternoon from my side as well. As always, I want to shed some light into the P&L, the balance sheet, but also an update on the share buyback, you know, where we are. Starting with the P&L, as always, Bjørn alluded to some of these numbers already. The most important one is a 13% currency neutral growth for the adidas brand. I want to highlight that again. We can't say it often enough. I mean, the total company grew currency neutral, including the Yeezy impact, 10% and reported 5%. There's a 5 percentage point difference between currency neutral and reported. That is around EUR 1 billion.
I come back to that in a second because that's an important number to remember in 2025 when it comes to the operational performance versus the reported performance. Of course, gross profit, very solid. I give some details, a double click on that as well. The operating profit, as Bjørn mentioned, EUR 2.056 billion, 54% up, in a very difficult market. Definitely very proud of what we have achieved. When you look at the guidance on how we started, we started March fifth last year with double-digit for the adidas brand. We have always been very confident on that one.
We said high single-digit, you know, currency neutral on the reported, including the Yeezy impact from 2024, where we had around, you know, EUR 700 million of Yeezy sales and an operating profit of EUR 1.7 billion-EUR 1.8 billion. I know at some stage I got criticized that we changed the guidance four times in 2024. We told you that we're not gonna change it four times again, but we did once on October 21. What we changed there is not the double-digit for the adidas brand, but we still had the higher single-digit net sales growth, but improved the operating profit to EUR 2 billion.
Finally, we came in, as you read, this morning, or actually, the pre-release already, 30% growth for the adidas brand, 10% reported currency neutral, including the Yeezy impact and an operating profit of EUR 2,000,000,056. I think what's important, coming back to the currency impact and the Yeezy sales, you see the quarterly breakdown on the growth percentages in the 1st quarter, 2nd, 3rd, and 4th. The 70%, 12%, 12%, and 11%, overall 13%, pretty significant. when you look at the quarterly breakdown, I think it's important, sometimes we get lost in the percentages. It's important and probably even going forward even more so that we talk about absolute growth.
When you see the quarters, pretty much every quarter you're growing absolutely the amount that, you know, On is growing, which is of course celebrated quite a bit, and rightfully so. This absolute amount, you know, shows you with progress that we have done. For the full year, it would have been or it was actually EUR 2.8 billion on operational growth for the adidas bran d. Yes, part of the truth is that we couldn't come to easy sales from 2024, which is EUR 700 million. As I just mentioned, the five percentage points has a negative FX of around EUR 1 billion. That's why in the books you only see the EUR 1.1 billion growth. I think the most important number here is the EUR 2.8 billion that we grew operationally.
Credit to all the marketing and sales teams around the world. Talk about the 4th quarter real quick. Again, you know, great trajectory with 11% growth for the adidas brand. There again, it's a big gap between, you know, currency neutral and reported 8 percentage points. The main reason for that is not just, you know, FX overall, but it's also hyperinflation when it comes to Argentina and Turkey. As you guys in the investors community know, when it comes to hyperinflation, we always need to use the spot rate at the, you know, last month to apply for the full year. That's why the impact in Q4 is always a little bigger than the previous quarters. That's why it is eight percentage points in Q4.
Bjørn mentioned already the improvement on the bottom line, so I don't need to repeat that again. From the top line going to gross profit, and I want to double-click on that one, you know, right away, because it's more important to dissect that a little bit. Again, coming from 50.8% in 2024, now underlying again similar to the EUR 2.8 billion, you know, growth that we have on the top line, we also make good progress to improve our gross margin. Product costs, not just because the volume is growing and we're doing a good job in sourcing, but we are also the brand or meaningful brand that gives our suppliers, you know, margin because we are growing the business. Not every brand can say that nowadays. That's why we have an improvement there.
The freight costs have more than normalized. It's normal course of business, in a volatile environment, of course. Business mix, you know, Bjørn mentioned the 60/40. We still made some improvements from a D2C point of view, so that's a positive business mix and also across the categories. Pricing and discounting, we have remained very disciplined. It's a neutral, you know, e-element in that underlying driving as other brands are much more discounting and being promotional, not just in Q4, you know, in 2025. Of course, here you have an FX again. Again, the FX is not just a U.S. dollar topic. It's definitely, you know, other currencies as well, whether it's the Argentinian peso, Japanese yen, Korean won, it's Turkish lira, and even nowadays it's British pound.
And I come back to that when it comes to 2026, what that really means. The tariffs we talked about a lot since April, but also here you see the, you know, gross effect and then the mitigation that we had, which is primarily in 2025, the discount that we get from our suppliers. There's a net, you know, impact of roughly, you know, 50 basis points. Again, you know, when we promised a healthy company in 2026, we also said ideally we get to a 52% margin. As Bjørn said, we are probably even ahead of it as the tariffs haven't been hit us, and it would have been 50 basis points on top of the 51.6.
We would have exceeded the 52% already and would have called out being a healthy company. Now going into 2026, what is the first indication for the gross margin driver to be transparent to all of you? We believe we have done a, you know, great job on the product cost, we are considering that as being neutral. The same on freight. Whatever's happening in the Middle East, I think we can manage it. We're on top of it. We build a lot of resilience when it comes to our supply chain and logistics. Probably more neutral effect. The same on the business mix. We always talked about the 60/40 wholesale in D2C, but also the categories as performance is now even growing faster than lifestyle. It's probably a neutral one as well.
Still, opportunities in pricing and discounting, it differences by market, but overall, we still believe there are opportunities unlike other brands, and we see that as a slight positive. I have to talk about, you know, FX and tariffs a little bit, which is a negative, which is again, on the FX, on the transactional side, we have a positive from the EUR to the USD i s not as positive as you all might hope for in 2026, but rest assured, as we are moving into 2027, and Bjørn will talk about it later on, we have significant benefits coming towards us in 2027. Because don't forget, just 14 months ago, the EUR to the USD was around 103. Then we had times of 120.
We are very comfortably hedged going into 2027, but there's already some benefits in 2026. Unfortunately, we have other currencies in very significant markets as well, like Turkey, Argentina, Japan, Korea, Brazil, Mexico, but also, you know, the U.K.. These are significant markets. They are all, you know, significantly above, you know, EUR 500 million in size, and they weigh on our transactional FX as well. That's what you will see later on on the bridge. This roughly is, you know, EUR 100 million, and then there's another EUR 100 million on the FX that we get on the translation again. You will see that later on in the bridge, but very much looking forward to 2027 as well when we get some of the benefits of the currencies. Going further down the line, it's a story of investing into marketing.
We always said the last three years we're not going to saving ourselves to profitability, through saving on marketing. Even as a percentage, 12.4%, that is probably, you know, close to the highest we have ever done. You see that the trajectory on the top line as well, that we are very well invested from a marketing point of view. What's even important that you all want to see that tremendous leverage on the operating overheads coming from 34.2%- 31.4%. 280 basis points or, you know, 4% down. Yes, some help with currencies. Yes, some help with one time in 2024, overall definitely going the right direction. Without that, we couldn't have grown our, you know, operating profit by 54%.
Of course, we looked critically at Q3 when we came from, you know, operating profit to net income, but also here for the full year and with help in Q4. You see that we are translating the 54% growth in operating profit to a 67% net income growth. How did we do that? The net financial expenses went up by 10%. That is on the one hand, because we carry less cash on the balance sheet, and because of that, we have less interest income. Primarily because of Turkey, the hyperinflation weighs on financial expenses. That is the main reason why we are slightly up compared to 2024, but also that is normalizing in 2026. You see that we have a good trajectory on the income taxes.
We went down from 26.5%- 24.3%. We always said, as we become a normal and healthy company, we will see the benefits in our tax rate as well as we become more profitable. You should assume also in 2026 that we will, you know, play around 24%-25% of tax rate as you start updating your financial models. Overall, very, very good net income growth of 67% and even more so on basic earnings per share of 76%. That's the P&L. Moving to the balance sheet. Inventories up 70% or currency neutral, 23%. I want to deep dive into that one right away. You might remember that we started 2023 with a challenge in inventories with EUR 6 billion coming out of 2022.
In hindsight, we believe we have been too disciplined on the inventory in 2023, coming down to EUR 4.5 billion. One reason was, yes, very disciplined because it was a problem. Secondly, you know, our top line grew faster than we would have expected, and that's why we went too low. It normalized in 2024. Now we have some special effects in 2025. On the one hand, of course, we are preparing for further top line growth in 2026. This is the real volume growth, not just what you see reported because there's FX impacts. We have some early product purchases to secure availability for our World Cup because that's important. You all know it's not just a significant event for the brand, but also commercially significant for us.
You know, after some challenges with supply chain hiccups here and there for the industry, we actually managed to have some, you know, earlier inbound to the year-end. Rest assured that, for the quarters to come, we will bring that, you know, further down. You should assume that we make, you know, progress in the first half of 2026. You can take me serious that by the year-end 2026, you will see a number that is below EUR 5.8 billion. What's even more important and testament to a good inventory position, what is the goods on hand and goods in transit and what is actually current inventory? You see that, the goods on hand, that is what we have in our DCs around the world, is actually 72%.
Only 7% of the total inventory is not, you know, currencies. These are things that are sitting in factory outlets. That's what we say again. We have good full price sell-through. We have current inventory. 28% is actually goods in transit, so on the ship, somewhere around the world or on a train or on a truck, wherever we are around the world. Very, very current, and it's the most current inventory we have seen for many, many years. Really quick, the rest of the balance sheet. Accounts receivable, of course, up as we are growing with our, you know, retail partners. That's normal, especially, you know, in Q4 as we have shipped in, you know, quite a bit with the growth that we had. Accounts payable are slightly down.
That is, as you know, what we need to pay to our suppliers in Asia as we, you know, get the shipments going. The operating working capital is of course up as well, but that is mainly attributable to the inventories that I just, you know, explained. When we go to the deep dive, we came from a not so good average working capital, you know, over net sales in 2022 and 2023. We went probably too low in 2024. It was 90.7%. I always said, if you get below 20%, you're an excellent company, but we are definitely a healthy company if you are anywhere between 21%-22%.
We are slightly up, you know, given the reason that I explained around the inventory, but I'm pretty sure we will get that to the range of 21%-22% in 2026. Talking about capital expenditures as well. Another piece where we have been very disciplined, we spent, you know, less in 2025. Where do we spend it? It's most importantly that we spend more than half of it in areas where the consumer will see it. It is a new retail stores. As Björn mentioned, there's 90 net openings. We have, you know, renovated or upgraded some retail stores around the world. We are investing into shop and shop. That's where the majority of the CapEx is going into, where the consumer sees it.
We are investing into our IT infrastructure, whether it's, you know, S/4HANA that we are rolling out around the world, but definitely also in our digital ecosystem, which will always be updated, will never be finished. That's where the investment is going into. Also there, the consumer will see it. On logistics, you see it's pretty small. Why we always said we have an infrastructure that can cater towards a EUR 30 billion business. The truth is also that there will be some markets where we are by far the market leader in Latin America or some of the emerging markets where we need to invest in one or the other DC. You see from a CapEx point of view, it's not dramatic. We have the infrastructure that we need for the future.
Of course, the working capital, especially the inventory, led to less cash than we originally had planned. It's EUR 1.6 billion at year-end. It's down from last year. It's also important that we put that in correlation to what is our, you know, cash overall, what is our adjusted net borrowings, and most importantly, what are our net leverage ratios, and that is important for our credit agencies as well. We are very, very strong from a leverage ratio. We have an internal policy of being below 2.0. We are still coming from, you know, above three to now 1.4 in 2025.
That's why it's important to mention, even given the cash that we have on the balance sheet, we have a strong investment-grade rating from both S&P, with A and stable outlook and also Moody's and A3 and a stable outlook because we've made a lot of progress the last couple of years and is being recognized by them with the effort that we have done. Because we have a strong balance sheet, we also, you know, propose an increase of 40% of the dividend, so going from EUR 2 per share to EUR 2.80. We believe that's the right amount. The shares outstanding, of course, is the number that was at year-end. That is changing as we do the share buyback. But that would amount, you know, result to share buyback to EUR 500 million dividend.
It's a payout ratio of 36%. We believe that's around right amount absolute and also ratio considering our share buyback of up to EUR 1 billion in 2026. You know that we had a first tranche that is finishing latest by March 18th of EUR 500 million. You see here, as of yesterday evening, we have already, you know, bought back the amount of EUR 400 million or 2.6 million shares. Definitely the banks have accelerated the last couple of days, but also well progressed, and you will see the benefit of that, you know, in the future. Overall, when you see the return to shareholders, which of course all of you are interested in, we had EUR 357 million in the year 2024 only through dividends.
You see now the combination of dividend and the share buyback in 2026 will return EUR 1.5 billion, around EUR 1.5 billion to shareholders. We believe that's pretty significant. We also believe we can only do that if you carry a strong balance sheet and if you're a healthy company, which we believe we are. You will see further on that we will strengthen that bond with our midterm plan. With that, I'm happy to hand over to Bjørn again.
Thanks, Harm. You probably remember our roadmap that we started talking about four years ago that said 2025 we should be a good company. In 2026 we wanted to define ourselves to be a healthy company. We have now added successful because with the numbers we're showing you and the evolution we've had over the four years, we think adidas stand healthy and successful. I want again, although I do it many, many, many times, again, repeat the way we look at our business model, and I hope you agree that it all has to start with the consumer and the athlete because that's in the end our customer. The closer you are to the consumer or the athlete, the better decisions will you do.
That's why we believe in a world that is getting more and more complicated and more and more diversified, we need to be closer to the consumer. That means that the markets will have to take more responsibility in the decisions. Whatever we define a market to be, it can be a country or it can be a region, but important is that we define where we wanna go to make what decisions. That's not sitting in a central office and believing that we know what's happening all over the world. This is important because if you wanna be EUR 25 billion, EUR 30 billion, EUR 35 billion, EUR 40 billion, you need to make good decisions when it gets to what kind of product are you bringing, developing and sourcing where, and not try to believe that you can do the same all over the world.
Global will always exist and headquarter will stay here in Herzogenaurach. We will of course develop systems, processes and frames and also innovation and even run some of the categories very stringent. We will be more and more local in the way we actually make decisions because there is no alternative at this size. That means, again, that we will make decisions as close as we can to the consumer. We need very, very good people, not only in headquarter, but also in the local market. I am extremely proud to see the energy we have now all over the world and the positivity our management in the market show how they think they can reach, you know, growth in the future.
When you then look at it, living this kind of world means that not everything looks the same. There are stores that look different. There are products that are hot in one market and not exist in others. This is the way the world currently is. I know there are different opinion about this, but I think we all agree here that there is no alternative. It could look like when we do a Superstar campaign, and don't forget, Superstar is not only a shoe, Superstar is also an apparel world. And it is an expression of a consumer, then the frame of the campaign will look the same. How we execute it, where we execute it, can actually be then different from market to market, and you see some examples of it here.
It is also true that creativity doesn't only happen in Herzogenaurach, in our headquarter, but it happens all over the world. I assume if you are on social media, you've seen the Tang jacket. This China design that was meant to be, you know, for the Chinese New Year went viral all over the world, and now we have a demand in every market around the globe. That showcases, again, the creativity power that we have and that we can exploit, when we have the right attitude and the right systems. It is also true that there are local developments and local fashion shows and local relevance that we do only for the market, like you see here. That's not only in China, it is of course also in other markets.
It is also true that to be a sports brand, we need to make sure we are in the sports that are relevant. I don't need to tell you that parts of the problem we had in the U.S. of not being what we should be is of course, that we haven't been visible in American sports the way we should, for many, many years. Again, I can assure you that we are doing everything we can to build that over time. Of course, we also have to admit that it takes time. You can't sign the biggest colleges or sign any leagues, or the biggest players unless they are free or unless you identify them early.
Our sports marketing teams, both globally and especially now in the U.S., are of course very, very active, making sure that we can build a base that we can grow from. It's not only in the U.S. This is a topic we have talked about many times, the cricket in India or the rugby in New Zealand or even rugby in France. I mean, the cultural relevance of that is very important. It could also be netball for the women in Australia, or, you know, winter sports for that sake, in my country, Norway. We wanna be like adidas and Nike, the sports brand that are in the relevant sports, both commercially and non-commercially, so we can have the ambition of being the number one sports brand in all the markets. We do know that we will not be the number one in all markets.
We should have the ambition, except for in the U.S., where I think the distance to Nike is so big that we should first have a target of actually doubling our business. All other responsible people in the market should have the ambition of being number one. That doesn't mean we will be it, but it means that they have to identify what they would need to theoretically be number one, and then it is a priority for global then in what markets we have the resources to do it and where the priorities sit. Again, there's no doubt that from the global point of view, it is mostly important now that we keep the leadership where we have it, that we ambition in all markets, and then we, in addition to that, specifically target the American consumer from America.
Again, for the people that are afraid that we will lose the control of the brand, you shouldn't be, because an adidas employee sitting in China or sitting in India or sitting in America is absolutely as much worth and should be as knowledgeable as a Norwegian sitting here in Germany. Then we have to, and unfortunately, we see it again, we are in a very, very fast changing environment. You have seen all these headlines. There are jobs being cut in Germany. There are conflicts that are terrible. That, of course, means, again, that we need an extremely agile organization with people that are, A, allowed to make decisions and have the attitude of making decisions.
Again, you know, being a global brand with a local mindset is easy to say, but it also has to do with the people and the culture. I hope you agree that over the last three years, we have created brand heat and credibility in all our divisions, and we have connected much better with our consumer. We have taken leadership in many markets and in many categories. Of course, we are not where we think we should be at the end. We still have many things to improve. If you look at the sales increases of the adidas brand, you see that we have grown now twice 13%. If you really look at the real growth of the adidas brand, it's even much higher. You know, the brand growth of adidas was EUR five and a half billion.
You have to remember that we lost EUR 1.3 billion of the Yeezy business, and we had an FX impact on our top line of almost EUR 2 billion. That, of course, then reduces this growth to be then only EUR 2.3 billion, when the original growth was actually EUR 5.5 billion. I think it's important that you don't forget that. It is the same on the profit side. You know, we went from EUR 2.68 billion up to EUR 2.056 billion, so more than EUR 2 billion in profit. Again, if you look at adidas brand's operating profit growth is even EUR 2.3 billion on top of the EUR 669 million. The Yeezy business we lost contributed to EUR 700 million. The FX impact on the bottom line was EUR 300 million.
The tariffs that hit us in 2025 were also EUR 100 million. That gives you then, you know, the reduction in the profit from what we really created. I think you need to give us some credibility for this because it's reality, and it's not really in our control. Again, I'm not saying that everything we do is great, but I'm saying we work for a fantastic company and a fantastic brand, and we have moved in the right direction, and we are very, very aware of what our challenges are. We believe in an operating model that empower more the markets and of course that has many, many, what should I say, tasks that we need to solve, but we think it's the only way.
If you look at the 2026, the underlying growth for adidas brand is actually EUR 2 billion. That is then, you know, the high single-digit growth that we talk about. Again, sitting in Europe, the FX impact will reduce the reported one by an estimate at around EUR 800 million-EUR 900 million that we currently see. Again, this is just because we're sitting in a Euroland in Germany, and it's not operational. If you look at the profit bridge, it's the same. You started with the 256, which we rounded here to 2.1. The underlying development that we promised you is actually EUR 650 million improvement.
There are non-mitigated tariffs of EUR 200 million and an FX impact of around EUR 200 million that actually reduces this then by EUR 400 million. It is a little bit strange, but if that hadn't happened, and again, these two things are outside our thing, you would actually be at the 10% EBIT, which was the number we talked about four or 3.5 years ago. Again, not an excuse, but it is things that you have to have in our mind. When it gets to the tariffs, you could ask, "Why can't you mitigate them all?" Well, you cannot get the price increases through the market right now because of discounts, and it doesn't help if you put up the price on the shoe box if discounts increases.
I think it's fair to say in the American market and actually also in the U.S. market, there's a lot of deals in the market from other brands that takes down the realized price. We also, in all these numbers that we talk about, have not adjusted any tariffs for the changes that you see in the last two weeks. The High Court's or the Supreme Court's decision that all the tariffs were illegal, we are not taking any positive things into these numbers. The lower rate of the 10% and 15% that they issued compared to the 19, 20 and other, this upside is also not in the numbers.
If the Supreme Court's decision should be upheld and we could, what should I say, get back tariffs, you're talking about EUR 300 million-EUR 400 million that we have paid of so-called illegal tariffs. I think we all know that there's a long way to get that back, and we are not accounting for it at this point in time. There is an upside to it. With all that, our official guidance is then high single-digit growth in local currencies and an operating profit on EBIT of EUR 2.3 billion with all the considerations that we have talked about.
Again, then I have to repeat again that, you know, in the four-year plan, we said healthy, company, it was a 10% EBIT with the 50/50 to the 12 and the 30, which ironically is what we would actually hit if we didn't have the FX and the tariff thing, in 2026. We actually believe that we have, from an operational point of view, delivered what we should do. You know what? There is an upside after this in 2027 and 2028 that things will turn, and that's why we probably feel a little bit more comfortable than maybe some of you do. For 2027 and 2028, we wanna stay a successful company.
To do that, we need to optimize our working model, and that means, decrease complexity or increase simplicity, which is kind of the same thing, and then optimize both processes, systems, and of course, the organization to also formally work towards this new world. We have broken a lot of internal processes and systems to actually be where we are because we have focused so hard on the consumer, that we have not been able to catch up to actually formalize that. Of course, that's a stress on both organization and systems and still, with quite some efficiencies.
We think we have to do this to win in the new global real world, short and long term, because we don't believe that the world will go back again to be one global marketplace where everybody wants the same and where your supply chain can be one big systems that works on averages. We actually believe, unfortunately, that the complexity when it gets to consumer demand and supply chain will continue to be very complicated. We think the brands that maneuver through that, the best way will actually win, and we wanna win. When you look at then the period 2025 through to 2028, you know the results for 2025. We told you that 2026 is high single-digit growth for the brand, EUR 2.3 billion in EBIT.
We will continue to add around EUR 2 billion on the top line, that would then course with everything that we are aware of around 10% EBIT in 2027. We think we can continue to do EUR 2 billion in increase also in 2028, that would then with some leverage than actually be EBIT margin about 10%. Again, I think it's important that we don't only talk percentages because the percentage we don't sell, we actually sell, you know, money or gain money. I think you agree that EUR 2 billion yearly growth is more important than a percentage number. That means, you know, from a operating profit point of view, you are in the mid-teens CAGR, that will, of course, if we execute properly and the world are somewhat stable, generate a very strong cash flow.
In addition to the share buyback we announced for 2026, we have been authorized by the Supervisory Board to actually buy back shares up to EUR 1 billion each year. I think that's also what you can expect should we be able to do what we think we should, and of course, in a world that is somewhat working stable. We have not talked about the Capital Markets Day to showcase what we do, because we have said we wanna focus in the next months on really getting ready for the World Cup.
Yes, the uncertainty currently in Middle East are asking some questions, but I'm pretty sure that it will be a very successful World Cup, and we have a lot of work to do to make sure that we will show up and that all our marketing that actually starts very soon, are going to be as good as we want it to be. We would then to showcase the confidence that we have after World Cup invite you in September, I think the preliminary date is the 23rd and 24th, to actually show you the pipeline of innovation and product going forward. There's a lot of innovation, especially in the performance product, but of course also in lifestyle, that I think you will be interesting to see.
We will call it an innovation day and invite you, and I'm sure Sebastian will inform you about that in the near future. I think that's kind of the story. I think you saw in the announcement a couple of other what should I announcement. One is that Thomas, you know, has been our chairman for a long time and which I think we all have worked very well with, has told us that he will resign as the chairman by the AGM. Again, I think we're all very thankful. At least in the time that I've been here, we've had a very, very good and close relationship, and I wish him all the best. We have, you know, been able to talk Nassef Sawiris to be our Chairman.
I mean, he's been with the company for a long, long time. He's a big fan of the brand. He's very interested in our industry, very knowledgeable, and again, a person that we have worked with for a long time and look forward to. We hope that he will be confirmed, you know, at the AGM. Ian Gallienne, we hope, will be reelected, same profile and extremely close to the brand. As a new member, the proposal is Matthias Döpfner, who will bring a lot of expertise and a global knowledge that I think will do our board well. We all look forward to work with these people and at the same time wish Thomas all the best.
In addition to that, I think we're all extremely happy that Michelle agreed, you know, to extend her contract. She is a long-term adidas employee, knows the industry, has a great heart for our people and a really good understanding of what is needed and works very close with all of us. Not only congratulations, but thank you. Yes, you can get rid of me again. I will stay around because I don't know what else to do, and I feel energized, and I feel I can bring something. Again, it is an honor actually to sit with the three stripes and be part of it also for the future.
I wouldn't do it if I didn't believe that we have a great future, and I can contribute, at least for another, what should I say, time period. I think with that, I'll hand back again to you, Seb, and then we see where we go from there.
Thanks very much, Björn and Harm. Of course, also congratulations, to Björn. Maura, we're now ready to take questions.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered a queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume from the webcast while asking a question. In the interest of time, please limit yourself to twos questions. Anyone who has a question may press star and one at this time. The first question comes from the line of Edouard Aubin from Morgan Stanley. Please go ahead.
Good afternoon, indeed, congratulations, Björn, for getting your contract extended. Two for me on the top line, actually. The first one is on lifestyle, which was still up 3% year-over-year in the 4th quarter. You mentioned in the preliminary remarks that Terrace was still strong, if I understood correctly, but maybe it was strong but negative year-over-year. If that's the case, you know, which kind of other franchises more than offset, you know, this headwind? Looking ahead, how do you see the different, you know, lifestyle franchise evolving in 2026? That's question number one. Question number two, sorry to go into the maybe the granularities of the guidance. Apologies.
If you look at, you know, the benefit from the World Cup, Bjørn, I think in the past you had kind of comment the EUR 1 billion type of top line. I know you already had some in 2025, but as for my calculation would help about the top line 3% in 2026. If I'm right with the math, you know, that would imply kind of a mid-single digit ex World Cup in 2026 and then reaccelerating in 2027 and 2028. And if that's the case, kind of what makes you confident that you would have a reacceleration in 2027 and 2028? Thank you.
I'll start with the second first. You know, when you have EUR 1 billion in World Cup product, it doesn't mean that that doesn't cannibalize something else. You know, in a merchandise, it's always like when you sell a lot of a national team, you will sell less of some clubs. You have to be careful to believe that one sale is kind of just on top. If you think about a store that has four walls, where there are World Cup products now, there will be other products next year.
Last year, there were other products. When we talk about the business, you can't just plug in that business and saying everything is equal. So we are very confident that, yes, the World Cup is part of it, and EUR 1 billion, you do the math and you say it's 3%, yes. It doesn't mean that the 3% is then missing when we get into 2027, because it doesn't work like that.
We are confident that we can take any event or any merchandising team, and we can replace businesses as we go ahead. There isn't any, what should I say, hole in the collection for 27 that doesn't give us the confidence. When it gets to your question about the headwind, I think it's a little bit tough to talk about headwind. We have generated a lifestyle business that I think grew 12%, you know, for the full year. I think everybody has been surprised by the longevity of Terrace. We have, of course, not believed that we will grow Terrace double-digit every quarter for the next 10 years.
We have said that we are launching, you know, newness in Terrace, and we're launching a lot of silhouettes in addition to it to grow the lifestyle business over time. What we also told you was that when we have created the heat on footwear, there is a time when we will be ready to also grow in apparel because you need to also grow in both areas, right? Maybe with different timing. You know, with luck or good planning or execution, the second half accelerated the lifestyle part of apparel. When you know that footwear is almost 60% and apparel is mid-30s, it is obvious for a while that you can grow then apparel quicker than footwear. When you look at the franchises, then Terrace is of course stagnating, but it's still at an extremely high level.
I think you see it in the stores, and you see it in the street. We said we were extending court into Campus, into Superstar, and eventually even into Stan Smith. I think, you know, yes, many people will say, "Oh, Superstar is not working that well." Well, Superstar is not only a shoe. Superstar campaign is a look. It's also an apparel collection that is doing excellent. When you look at Kendall Jenner, the way she's dressing, that is a whole statement for the brand. It might be that Superstar is not going to be the biggest shoe in the next, I would say, quarters. The court side of the business, if you add, you know, Terrace, if you add Superstar, and then the introduction of Stan Smith, you will see that the dominance of adidas on the court side will continue.
What no one talks about more is that, you know, the low-profile piece is an extension of that. I don't need to tell you when the weather went warm now, I mean, ballerinas was going through the sky. I'm not worried that we don't have the pipeline of classics to actually continue to grow, especially on the court side. When it gets to the running lifestyle side, then I have to admit that there has been other brands. I mean, New Balance with the Retro, ASICS with the Retro, and HOKA and only their comfort, that of course has been more dominant. We said that we need to bring newness, and we didn't have the right silhouettes. We've done quite some business on Retro too.
That's why, you know, the whole Hyperboost is so important because that is the extension of performance into lifestyle that we've been looking for. Remember, again, I wasn't here, so other people should take the success. Shoes like NMD, Ultraboost, and everything we did with our friend at Yeezy was clearly because also of the Boost form. We think we have engineered, you know, the products to be successful. Then again, not everything can grow higher than average. It doesn't work. That's why we think that the growth we had during the year was very healthy. We see where we are now in Q1.
We feel, you know, except for the circumstances right now, when it gets to the terrible thing happening in Middle East, we actually feel that the pipeline of product and what's going into market is very, very strong. We feel comfortable.
Okay, great. Thanks.
Next question comes from the line of Erwan Rambourg from HSBC. Please go ahead.
Hi, good afternoon, gentlemen, I'd like to add my congrats to Bjørn for sticking around for longer, if I could put it that way. I'll stick to two. China, very fast-growing in Q4 last year. Does this continue? Are you seeing any change in the landscape, vis-a-vis local competition? Is there a reason for China to continue to outperform other markets? Naively, I get the sense that football might be more relevant for LatAm in Europe than it might be for China, I might be wrong on that. Any sense on whether China continues to outperform? Second question, possibly more for Harm. In terms of margin expansion,
If you look the, you know, the two, three years out that you detailed, if you look at gross margin expansion versus operating leverage, I suspect given what you're mentioning about tariffs and FX, gross margin might not contribute that much this year, but maybe you have a more balanced contribution from gross margin expansion and operating leverage in the outer years. Is that the way to think about it? Maybe if you can help us think about the different buckets. Thank you.
I think you're right that, you know, football and the World Cup in China is not a game-changing thing. We see that the Chinese business is built on lifestyle. It's also built on running, and it's built on silhouettes that not necessarily is linked to football, although the soccer culture is actually doing also pretty well in China. We are extremely confident with the development in China because our team has really found a business model where they both develop and design their own stuff, but they also tweak, you know, global stuff.
And because you can produce in the local market, in the factories, and as you know, the Chinese retail market is mono-branded, where you control the space, even if you don't own the stores, I think that's the business model where we have most the tools to actually be successful. The local brands, you know, have made huge improvements. When you go back to the time after COVID, you probably remember also that Western brands were struggling with all the conflict coming from the Xinjiang cotton issue. Since then, I would say that we have answered in a way that we have focused on the Chinese consumer through our Chinese organization, giving them freedom and support to actually compete on the same level. And remember, our management in China are Chinese.
Yep.
They are adidas people that used to work for us, that then left and worked for Chinese brands and then came back again, so they understand the model. I am actually, if I should look at it, probably most confident in the Chinese market, compared to any of the markets, because I'm not sure what negativity should actually hit China, to be honest. I'm, I think that China will continue to outperform, and as you know, it's a, it's a pretty profitable market. And again, very, very happy with the development. I think, I'm handing over to you, Harm .
Thanks, Erwan. A very good question. I thought probably with the gross margin, you're absolutely right. I mean, 2026, what we indicated earlier, we have, you know, EUR 200 million in tariffs that we have in the gross margin, and it's EUR 100 million more than in 2025, and we have EUR 100 million transactional FX impact in the margin. That's why we look at 2026 as being more, you know, stable compared to 2025. That shows you already that operationally we make good progress and they're not gonna go or entertain the discounting or promotion that other brands are doing, otherwise it can't be done.
Also rest assured, we know exactly how we have hedged for 2027 already, especially for spring/summer, but we started early also when the, you know, U.S. dollar was, you know, pretty weak and weaker than today, going into fall/winter 2027 already, which is earlier than usual. We know that we have a very, very good gross margin going into 2027. That's the gross margin piece. You're absolutely right. Stable in 2026, you know, benefits in 2027. On the operating overhead leverage, you saw with the 31.4%, we are not yet where we want to be with the 30% or lower. We'll definitely make progress here in 2026 and we'll continue to make progress into 2027 as well to get, you know, eventually to that 30% or lower.
You also need to see now it's becoming a ratio game. Of course, when you lose EUR 1 billion in top line and you have a lot of, you know, operating overheads, in EUR, it's tougher to hit the ratio, right? That's also part of the equation. That also leads me to the third topic, as Bjørn indicated, that we lost, you know, almost EUR 2 billion, in translation impact on the top line. I mean, this could also flip at some stage, and then we have a different P&L, whether it's ratio absolute. We become a much bigger net sales company all of a sudden, and that will definitely lead to absolute benefits, right? Whatever the ratio will be. That's pretty much where we are. It's a very important question, that we definitely don't take lightly.
Thank you so much.
Next question comes from the line of Jürgen Kolb from Kepler Cheuvreux. Please go ahead.
Yes. Thank you very much for the questions. Again, Bjørn, good that you don't have anything else to do and stay with us for some more years. Good to hear that. On the question side, on China, coming back to that, we know that China, there are two major trends, running and outdoor is actually quite strong. I was wondering how Terrex is doing, especially in China and if that is a real driving force for you guys, maybe also going to other markets.
Coming back to the gross margin side again, in raw material maybe, how are you hedged there? How long can you kind of sustain the rising pressure from oil and oil derivatives? When would that become a nagging problem for the gross margin also going maybe into 2027? Thank you, guys.
The China market is of course not only running in outdoor, but from an activity point of view, you're pretty spot on that running is booming. As you know, we have worked very hard To kind of build credibility and then take the credibility down in price. You know, the Adizero SL is currently our best-selling shoe. In China, we also built even products below that with technology. The pipeline and running, both from a visibility, having events and having runners and also answering that with an offer that is targeting, I think we are in very good control.
When it gets to outdoor, you are actually right. Although the outdoor in China goes in the street and a little bit up the mountain. It's not on the top of the mountain. It's a combination of lifestyle and performance. You're probably referring to some of our competitors, the Chinese, that has bought Western brands, has done excellent in that area.
Terrex, which is our answer to it, has starting to build the same thing. We are building, I will call it EUR 150 shoes and below, with, I would say full technology, but that goes in the street and a little bit of the mountain. We are building, you know, light down jackets, we are building fleece and we're building collections that goes both on the street and a little bit up the mountain. Let's put it this way, and it's actually doing very well and it's probably going to be our strongest Terrex market quickly, if it isn't already. You have identified two areas that are right.
Again, not a surprise to you probably, but the Chinese team are then building, you know, tweaking products for local production to actually then achieve high margin and also targeting the specs that is needed for China. That is correct. When it gets to the raw materials, we don't hedge raw materials. You have to remember that we develop materials together with the suppliers, and then suppliers gives us prices normally for a season. They actually, if at all, are hedging the materials. We don't see a price increase in materials currently. When you look at the oil price and the short-term thing, the only place where we see it right now is on air freight, because that has exploded for obvious reasons. We don't know yet what will happen to materials prices.
We are okay in our pricing, I would say, through at least 1st quarter of 2027 when it gets to the agreements we have with the suppliers. Should this conflict cause other areas, I'm sure we will have areas in freight and maybe even in materials. Right now, we don't have anything in the pipeline that you need to worry about, that would have a major impact. And again, I hope both of us hope that there will soon be no rockets left, they need to talk, right? I mean, that would be the objective and the dream, to be honest.
Very good dream indeed. Thank you very much, guys. All the best.
Next question comes from the line of Geoff Lowery from Rothschild & Co Redburn. Please go ahead.
Hi. Afternoon, team. Just one question, please. You've referenced a few times, a promotional environment. I was just interested in your perspective on what sat behind that. Is that particular brands with particular product issues or inventory issues that they'll gradually work through? Or do you think this is a new cost of doing business more generally in terms of activating consumers? Thank you.
No. I do think that, especially in Europe and America, these are issues to keep the space in distribution and of course, also inventory issues and also retailers that are nervous, so they're buying deals. There's a combination of many things. I think if you've been in the stores over the last six months, I think you've seen a lot of red marked product that normally wouldn't be red marked. I think it's a combination of those two things. I don't think this is a long-term sustainable way because it doesn't make any sense for neither brands or retail. We, we are counting on that this will, what should I say, disappear over time.
Understood. Thank you.
The next question comes from the line of Warwick Okines from BNP Paribas. Please go ahead.
Thanks very much. Good afternoon. I wanted to ask the same outlook question you've had already, but put in millions of euros rather than percentages. The profit bridges you've given are very helpful. In 2025 you grew operating profits by EUR 700 million despite EUR 300 million in headwinds of Yeezy and tariffs. In 2026, the headwinds are a bit bigger, EUR 400 million, but you're only expecting a EUR 250 billion increase this year. What is that bridge, please? The second question is what would the EUR 200 million tariff headwind in 2026 be if you were to take into account the news of the last two weeks? Thank you.
You have to remember that the tariffs that has happened since he installed them, this part of those that he just installed that has been deemed illegal, right? There are agreements between nations that are bilateral, that are not illegal because if you make an agreement with a country like he did with India, that is not illegal. There are different, what should I say, topics. If we calculate through all this, which is not easy because there are markets like China that have five different duty rates for 12 months receipt, then the impact of the changes that he did, you know, the 10 and the 15 of the Supreme Court compared to what it used to be, I would say is probably EUR 30 million-EUR 40 million, but it's not really that relevant.
If you look at all the duties or the tariffs that we have paid for the period that could be illegal, you are speaking close to EUR 400 million. There is a big variance here between the different things, and I don't think any brand right now knows what we can expect, right? It cannot be anything negative other than what you have seen. What you see is the worst case, right? It is the duties that were there before the Supreme Court said it was illegal, and there is no, what should I say, positivity on maybe claiming back paid duties. I think that's the only thing that I can tell you.
On your first question, I'm not 100% sure what you asked, but the improvement in the profitability, everything being equal, is actually EUR 650 million. You have the duty and the FX that takes you back EUR 400 million, right? That's the only bridge I can do. The EUR 650 is of course leverage and gross margin on the growth that you're having. I don't know how else to answer it.
Okay. That's helpful. Thank you very much.
No, just real quick, Warwick, I understand that you compare like the improvement that we did in 2025 as improvement that we plan to do in 2026, right? The detail is that is in the FX where the FX impact is coming from the respective countries and if the FX is primarily coming from the U.S. dollar, it's less of an impact what we saw in 2025. It's across many countries, and when it comes to Argentina, Turkey and Japan and Korea, what I just said, it's across countries that are more profitable, and that's part of the answer.
Again, it's complex with all the countries that we're operating in. There's not an easy bridge that we normally have in gross margin when it comes across all these, you know, you know, countries and the currency impacts of all these detailed currencies. I'm happy to do that in a one-on-one when we see each other on a roadshow.
Okay. Thanks, Harm.
The next question comes from the line of Zuzanna Pusz from UBS. Please go ahead.
Hi. Hello. Two questions for me, please. We talked about the gross margin that is going to be stable. There is a big benefit from the hedging of FX in 2027. Could you talk a bit about what kind of a gross margin level you are assuming for by 2028? Previously we talked about 50%-52% to get to 10% EBIT margin, 12% marketing spend. Is it the same? What kind of impact does the performance, I guess, skew to the growth at the beginning versus lifestyle? I mean, like, what kind of gross margin gap are we talking about?
Is it now better than it was historically, given some changes that you did? Maybe secondly, if you could touch on like what has been the performance year to date. I guess the environment is very volatile. Are we talking about the growth above high single digit? What is the shape of the order book, if you could comment? Thanks.
That was many questions and many difficult ones. I'll start with the last one is that the start of the year has been good. I think I'll leave it like that in a very volatile marketplace, that's both for retail and wholesale. We are happy with where we are end of February. I think on all the other, when you start talking about margin in 2028, you're jumping a little bit ahead. I do think that if we bring, you know, E UR 2 billion every year on the top line, there should be leverage on every cost line that you can think about. We know that we can improve, you know, our processes and systems. We do know there's something called AI that we haven't even priced into the leverage.
I think we should continue to say that we think we can take market share, that the growth in absolute terms that we talk about, realistically is around EUR 2 billion a year. I think how far we get then on the EBIT margin then depends on all the other elements. I think it would be very crazy for us now to start to define those bridges for 2028, because I wouldn't know other than there should be improvements on many levels that then should please you as an investor. I don't know, Harm, if you wanna add something to that.
Absolutely. Now mapping our 28% gross margin, I mean, it's probably the most difficult KPI to manage even on a quarterly basis. I mean, whether it's the hedging and it's not just the U.S. dollar, it's many currencies that we're hedging or not actually hedging because they're too expensive. There's footwear, apparel, there's categories, there's country mix. I mean, a lot of things are happening. You know, looking forward, why we're so confident about where we are heading and that we are going beyond the 10% EBIT margin is definitely coming out of the cost leverage. We will be a more sizable company, there's no question.
And again, if we are getting to a 52%, you know, margin or better, the key is that we leverage our infrastructure, right? We will be much, you know, bigger company. The key to watch is how we leverage our infrastructure and our cost overall. That's where we can do a lot, whether it's AI or other things where we can run the company differently. That is definitely the element that will bring us, you know, beyond the 10% EBIT.
Next question comes from the line of Aneesha Sherman from Bernstein Societe Generale. Please go ahead.
Thank you so much. I have two, please. Björn, the first one is, when you first joined, you inherited a very early stage Samba launch in early 2023, and you were able to grow it and make care such a powerful driver over the last three years. You're now looking at the next stage, rather than one kind of blockbuster product, you've got a wide range of products in performance, lifestyle, apparel, et cetera. How do you think about that ramp up in brand heat that you saw with Terrace playing out across a wider range of products? Do you need to have those one to two blockbuster products that really carry the brand? Is it possible with a much wider range of products where each individual franchise is not as powerful? Just curious about your philosophy.
A second one for Harm, please. When you think about cost, the cost base for 2026, you know, you just said on the prior answer that you should have leverage on every item if you can get to that two billion incremental sales. For overheads, you've been at about 7.8 billion for the last two years if I take out those one-off costs for 2024. Is that a pretty steady state level you think you can stay at, in which case you should see more leverage on the overheads line item? I'm just trying to bridge, you know, your operating margin guidance and see where the leverage could come from versus where there could be some deleverage. That would be helpful. Thank you.
Well, I can tell you that I feel a lot better having many franchises doing well on both performance, and lifestyle and both footwear and apparel doing well than putting my destiny on one franchise. I think we have to be very honest that at the beginning of 2023, when the negativity and the performance of the company was not that great, it was a gift from heaven to see that we had a Samba that actually was in high demand. I think we then did a great job scaling it, and it ended up not being only the Samba, but what we later, you know, teach people that it's called Terrace, and it included, you know, Gazelle and Spezial and then later Campus and More Shoes.
You know, the risk we took at that point in time, I think was for many outsiders, "Oh, you crazy." You know, we did what we felt we had to do. Of course, the portfolio product we have now is much, much more healthy. I think many companies today, without mentioning name, are now, hanging on one franchise or actually hanging on one look, which of course is not very pleasant. It is a clear goal for us, to have a wider portfolio product, and to always have the possibility to also create brand heat on apparel. Let's face it, footwear has a much more narrow, what should I say, platform, and there's not that many trends.
If you do apparel well, in addition to your performance and your lifestyle footwear business, you have a much, much bigger Area to play in. I think you also agree that on apparel, the regional differences from a Tang jacket in Japan to a soccer cultural item in U.K., that there are many, many variables that you are much more easier to play on, to be honest, to get business going. Very, very proud of what the product teams have done to expand the ranges, so we're not dependent on only the Samba, which, you know, for maybe 12 months was very unpleasant, because if that hadn't worked, I might not have extended my contract. Let's put it that way. Harm.
Yeah. When it comes to the cost base, you listened very well in the past. We indeed, excluding the one knows we are around EUR 7.8 billion. Of course, there's some FX impact in that one as well, especially in 2025. On the other hand, I mean, when you're growing high single digit, you know, in 2026 or the years to come, of course, you drive more volume. This is not just, you know, done through pricing. You need to see that the absolute increase that we might have in cost is coming from freight costs. Either you bring the product, you know, into the markets or you ship out to the retailers or to the consumers, because you move more volume. Secondly, we said earlier that we have net 90 more retail stores.
You got to pay, you know, rent, you have depreciation, you have people in running these retail stores as well. You have some annualization effect. When it comes to all of the overall personal expenses that we have, we try to, you know, keep it at where it is because there's an expectation of salary increases, not just here in Europe, but also in some markets where you have inflation. It's going up more than here, probably in the headquarter. Of course, you know, through some programs, we have fewer people. We can become more efficient over time, and that's what we are working through. We definitely can do better. The leverage really comes through our DC infrastructure. It comes through our IT infrastructure.
It comes through normal office costs that we have or less depreciation because we invest more disciplined on CapEx, so. Just staying flat on the 7.8 is not that easy if you're growing the volume as well. Again, there's focus on it. We are for first and foremost looking at the ratio and the leverage, but we can definitely do better of, you know, not even bringing out the big word of AI, but there are a lot of things that we can do better to become more efficient, but it's not always the same absolute number, right? The leverage is what we are focusing on.
That's really helpful. Thank you both.
Next question comes from the line of James Grzinic from Jefferies. Please go ahead.
Thank you. Yes, good afternoon. Just a quick one really for Bjørn. A follow-up, I guess, to your answer to Geoff's question in terms of over-inventory position in the industry, especially in North America and Europe. Do you feel that more broadly for the industry, we are in a bigger over-inventory situation now compared to one year or two years ago? Just curious by hearing your thoughts on that, and perhaps if you can comment specifically even in big parts of the world like the U.S. and China, for instance. Thank you.
No, I don't think I even said over-inventory. I, I would say that I think brands are fighting to keep their sales by making deals with retailers. That doesn't necessarily have to be old inventory. I don't think there's a huge inventory problem as such, like we had, you know, if you go three years back, especially in China and the U.S., there was a lot of inventory, including ourselves. I think it's that people are uncertain and to make sure that their wholesale business is holding up, people are making deals, and the retailers are nervous, so they are asking for deals. I think it's the right the special attitude that the business is currently having more than there is a lot of inventory hanging around. I would describe it like that.
I'm sure there are some inventory for certain brands who are negative in their top line in certain markets like in China, and they want to get rid of that inventory. I think the issue is more people are afraid of losing top line, and therefore, making deals. I think that's the description I would give.
Very clear. Thank you.
Next question comes on the line of Andreas Riemann from Oddo BHF. Please go ahead.
Yes. Good afternoon. Two questions, also on the brand. Bjørn, you're broadening the range with more categories. You add more wholesale partners every year. How do you make sure that you don't stretch the adidas brand too far? From a different perspective, what are the things that you don't do to keep the brand hot? Any insight here would be appreciated. The second one is related to takedown versions. You're not talking about takedown versions anymore. Are those products still growing? In what categories are you offering these products, if you do that? This would be my two questions.
First of all, adding retail partners, I don't think I ever said that. What I've said is that we are servicing retail partners better in the sense that we take care of them, and we have a much tighter dialogue with them, what kind of product we can build together. That's both in performance, adding lifestyle, and it also includes in many areas, what you call takedowns in sportswear. I don't feel that we have an issue of controlling the brand, because, you know, the people that are dealing with the retail in China and developing products in the U.S. or here are all adidas employees. We all have the same interests. We have the same creative direction, we have the same color card, we have the same technologies.
The point is that, if you decide that China should have a lot of locally running shoes at price points between EUR 50 and EUR 100, I think the Chinese teams knows that better than a global product manager sitting in Germany. It's not necessarily that we widening neither distribution, which we're not, nor widening the categories that you said. It is more that we make much better decisions where the consumer is. Don't forget that the biggest mistake you can do in this industry is to centrally push concepts out in the markets that no one wants because then they get discounted. I think you agree that product that are heavily discounted does not bring, A, brand heat, and B, does not bring you any margin.
I think if you go through the P&L, so many brands right now, you can measure the brand heat and the assortment on the gross margin. I think when you look at our gross margin build over the last three years, knowing that Yeezy is not there and we're approaching 52%, I don't think anybody can raise the question if we have the right range or if we're stretching the range. I don't know who told you this, but I don't agree with you that this is the case. What was the other one?
The other one was the takedowns.
The takedown is, again, if you look at footwear, I mean, let's face it, every brand are doing takedowns. There aren't gazillions of variations. If you look at our competitors, you will see that you see the same look in many price points. If you look at Nike Vomero, you will see that in five different price points. If you look at New Balance, you will see the same look in all kinds of price points. I think takedowns, and we could call them something else, but taking a trend and then multiply, you know, the offer to different distribution and price points has always been in this industry. I don't see that as an issue either.
What has been good for us, or you can say negative, is that the growth in originals has been higher than in sportswear, which would tell you that the higher end has actually been more in demand, or we have supplied it more than we have on the lower end. You know, people tend to say we are or I am too commercial, and they try to build that story. I don't know if that's maybe too, what should I say? They're less focused on themselves. I would measure the growth margin on the different brands. Then when they say they don't wanna distribute where maybe we are distributing, I don't know any place where we distribute our product that our competitors are not.
You know, it's very easy if you go to a store to see what brands are there. I have never gone into a distribution where I'm the only brand, not in my previous jobs or on this job. I think the brands that end up in the wrong channels are maybe because what they tried to do in the right channels didn't work, and then they have to clear it, right?
Mm-hmm.
Again, I don't agree with the stretching distribution because I don't think you will find us in any distribution that you will say is wrong. If you do, then please call me because then I would like to know about it myself.
No, I only made the point because the number of wholesale partners, if I'm not mistaken, was growing from 100+ to 200+ in the last three years, if I'm not mistaken, right? That's why my question.
I don't know what number you're talking about.
Okay.
You're talking about visiting headquarters.
Yeah.
You referring to is that we double the amount of customers that can see our range here in Herzo. that's the same-
Yeah.
Yeah, it's just better service. That doesn't mean that they're new customers.
Okay. Okay.
We don't have more customers now as partners than we had two years ago. It is true that they're all allowed, or not all, but many of them are allowed to actually come here to Herzo because that's why we have the campus, you know. It's not a secret place. This is a place where, you know, the adi family, both our partners, our athletes, customers, can come. That's where you have the number from. We don't have more distribution points, and weaker quality distribution points now than we had three year. I would say it's the opposite because we had a lot of clearance back in 2023, so there might have been products in the wrong channels, and I don't think you find that now.
Okay. Okay, thanks for clarifying.
No problem.
Maura, we have time for one more question.
Our last question for today comes from the line of Monique Pollard from Citi. Please go ahead.
Hi. Afternoon, everyone. Thank you for taking my questions. Just two from me. The first question was just, you know, given your commentary about being conservative on the wholesale sell-in for Europe and North America and also, you know, your comments on the level of discounting by some of the retailers in those markets, just wondered if you had continued being so conservative with the wholesale sell-in in those regions into the 1st quarter or whether you've been a bit more bullish on the sell-in there. The final question, obviously understand that the situation at the moment very volatile, but just wondered within your EM segment, whether you could break out sort of MENA exposure for the key countries that have been impacted. Thank you.
I'll start with the emerging markets and the situation. You know that we have six subsidiaries that are affected by this, that are run out of the Dubai office, and of course, they are in a terrible situation, and most of them sitting in lockdowns and also, you know, from time to time, sitting in shelters. The only focus in those markets, the last couple of days has been the safety of our people. Business issues is not really relevant. When it gets to other markets in the regions, there are stores that are actually open, and in certain of the markets, the government are asking us to keep them open. If our people are then willing or want to keep them open, we do.
It's again, the local decision on how we or how they, what should I say, behave in a very difficult situation, and our job from a headquarter is just to support them. We even offer to charter planes and fly people out if that's what they want, there's no financial limitation on anything that they can do. As always in these situations, the people that are used to living in a volatile world have a different attitude than us and are extremely strong, and again, are doing fantastic things. The impact on the business is impossible to say right now, and it's not even something we look at, to be honest.
When it gets to the global business, we don't see any impact short term on this. There's no, what should I say, other means than being very close to everything that we can. There is an area where we will see problems, that's on air freight, you know, because of the situation in the airspace. A lot of planes being grounded that we will have delays on certain, what should I say, products that needs air freight. That could be samples that we need for meetings. It could be, you know, special products for special events. Also that, there is no impact right now that would adjust any numbers, to be honest. Same thing on the cost base.
Yes, we see oil going up, we currently don't have any guesstimates or estimates what impact that could have. You know, in, in freight and all that, we currently have long-term contracts that also doesn't react short term. It's too early to say, and I think you agree, we all hope that, as I said, that some of these countries will run out of rockets so that people will talk instead of shooting at each other. The hope is, of course, that talking will cause some kind of peace. I think that's the only thing that I can say.
When it gets to the conservative selling in the wholesale, I think there's, the quote is more coming from that we have currently not been willing to do these deals that we talked about. You know, a lot of retailers, and I can understand them, are looking for deals, if it's clearance or if it is, you know, even production, if they commit to bigger volumes where they will get a higher discount, and then that allows them again to sell discount. I think if you follow the retail environment, especially in Europe and the U.S., you will see that a lot of products that used to be full price are now discounted. We have.
I mean, Mathieu is not here, but our commercial director has so far avoided to do these deals, because it's obvious as soon as you start to do it's like a drug, right? I mean, if you are onto it's hard to get off it. I think you see that in our gross margin that we have been able to kind of, at least in our own business and also the wholesale business, to avoid it. That our product has been discounted is of course there, because if a retailer does 20% in the window or does vouchers on online, it also affect us, but it doesn't take our margin down because then it's the cost of the retailer, right?
Again, we are looking at it, but we're not running after every sale by making deals and are hoping and believing that the market will dry up in the sense that it is not necessary. We hope that all the companies, our industry, have the health that we can actually avoid it because it of course takes the profit pool in the industry down.
Very clear. Thank you.
Thanks, Monique. Thanks, Maura. Thanks very much to Björn and Harm, and of course, as always, thanks very much to all of you for participating in our call today. As always, if you have any follow-up questions, please feel free to reach out to Adrian, Philip, Chiara or myself. We very much look forward to speaking with you. In fact, we're actually looking forward to meeting with you as we will be on the road quite a bit, both here in Europe and also in the U.S. Lastly, you've heard it from Björn, we of course hope to welcome all of you here on our beautiful campus later this year for our Innovation Day. The details about this and the detailed timing at the end of September will follow soon. Thanks again for your participation. Speak soon. All the best. Bye-bye.