It''s all about how well they play in the second half Adidas reported a Q1 beat and announced a strategic partnership with Foot Locker. However, it lowered full year underlying guidance, albeit consensus EPS is unlikely to move due to currency and tax. The concern investors have is that it still leaves Adidas needing a strong second half, and the uncertain consumer outlook might not support this acceleration. We leave our below-consensus forecasts largely unchanged, with improving brand momentum the main opportunity for a re-rating. A Q1 beat despite a miss in China Although rather lost in the noise of full year guidance, Q1 beat expectations, c.2% ahead on sales and 10% on profits and EPS. Like peer Puma, its performance was very skewed to a better performance in Western markets and a much weaker than expected performance in Asia. Adidas also announced a strategic partnership with Foot Locker which to us looks like a good platform to relaunch its US basketball strategy in H2 as well as more broadly increasing Adidas'' distribution. How much of a leap of faith is new guidance? Management adjusted its full year net income guidance to the lower end of its EUR 1.8-1.9bn range. Consensus was already at the lower end, but the underlying profit margin guidance was lowered, compensated by more favourable currency and lower tax. The guidance assumes 3-year growth accelerates from flattish in H1 to over +20% in H2. There are logical drivers to this improvement but clearly the consumer outlook presents risks. We model more cautiously with our H2 sales growth forecast largely unchanged at +15%. See Figures 3 and 4 inside. No change to the gameplan: forecasts unchanged Our full year net income forecasts were already below management''s guidance and so we leave our estimates broadly unchanged today. These still require an acceleration of growth in H2, driven by fewer supply constraints, recovery in Asia, continued momentum in Western markets, new...