Core Viewpoint - Adidas reported significant losses in Q2 due to the Trump administration's global tariff policies, warning of potential cost increases of up to €200 million (approximately $231 million) for its U.S. sales in the second half of the year [1] Financial Performance - Adidas' Q2 net sales grew by 2.2% year-on-year to €5.95 billion, slightly below Wall Street's average expectation of €6 billion, impacted by approximately €300 million in adverse currency effects [2] - The company's inventory increased by 16% to €5.26 billion as a result of early procurement of sports products before the tariffs took effect [1] Market Outlook - Adidas maintained its full-year guidance, expecting sales growth in the high single digits and operating profit between €1.7 billion and €1.8 billion, which is stronger than market expectations [1] - The company faces challenges from U.S. tariffs on exports from its major sourcing countries, Vietnam and Indonesia, which account for about 27% and 19% of its product scale, respectively [2] Competitive Landscape - Nike, a major competitor, reported a significant decline in net profit by 86% to $211 million, indicating the severe impact of tariffs on international sports brands [2] - Analysts from JPMorgan view the 2026 World Cup, co-hosted by the U.S., Canada, and Mexico, as a potential catalyst for sales growth for Nike and other sports brands, predicting a recovery in operating profit margins [3]

Core Viewpoint - Morgan Stanley has upgraded Nike's stock rating from "Neutral" to "Overweight" and raised the target price from $64 to $93, driven by optimistic expectations regarding the company's recovery and the upcoming World Cup in North America in 2026 [1][2]. Group 1: Stock Performance - Nike's stock rose by 3.89% on Monday, closing at $79.24, marking the highest closing price since late February [2][4]. - Since the announcement of the fourth-quarter results on June 26, the stock has increased by over 25%, and it has surged 47.1% from an eight-year low reached on April 8 [2][4]. Group 2: Future Growth Expectations - Analyst Matthew Boss anticipates a "five-fold multi-year recovery path" for Nike, projecting earnings per share growth of high teens to 20% over the next five years [2][4]. - The 2026 World Cup is expected to act as a sales catalyst, with plans to expand performance product lines, particularly in running and global footwear [4][5]. Group 3: Profitability and Inventory Management - Boss predicts that Nike's operating profit margin will recover by approximately 5 percentage points between 2026 and 2028, reaching a level above the anticipated 5.3% for the fiscal year 2026 [5]. - There is potential for an additional 2% to 3% increase in profit margins post-2028, aiming to return to pre-pandemic levels of 12% to 13% [5]. - The management views inventory growth relative to sales growth as a key performance indicator for assessing global inventory health [5].