The news: Adidas raised its full-year earnings guidance.

It now expects an operating profit of about €2 billion ($2.32 billion), up from its previous range of €1.7 billion ($1.97 billion) to €1.8 billion ($2.09 billion).

The context: The upgrade follows stronger-than-expected revenues and profit.

• Currency-neutral sales climbed 12% YoY, or 8% when including last year’s Yeezy sales (Adidas sold off its remaining Yeezy inventory in the prior fiscal year).
• Regional performance was strong: North America and China grew 15% and 11%, respectively (8% and 2% including Yeezy). Latin America surged 23% (22% including Yeezy), emerging markets rose 14% (12%), and Japan/South Korea increased 15% (13%).
• In Europe, adidas brand revenues were up 7% (4% including Yeezy), even without the roughly €100 million ($116.1 million) in sales from last year’s UEFA European Championship soccer boost.
• Gross margin improved 90 basis points to 51.7% despite a flurry of headwinds, including unfavorable effects from currencies, business mix, and US tariffs.
• Operating profit jumped 58% YoY.

Our take: Adidas is skillfully navigating a tough macro environment. The company has offset tariff impacts by hiking prices in the US and reducing imports from heavily affected countries such as China, per the Financial Times.

With Nike still in turnaround mode, adidas is building on the momentum of its popular Samba and Gazelle lines while pushing consumers toward apparel and accessories. That strategy appears to be paying off: Apparel sales rose 17% YoY, and accessories climbed 7%.

Nike CEO Elliott Hill told CNBC the brand still needs to earn back shelf space—and adidas is making that a harder sell.

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