Rising Costs From U.S. Tariffs
Adidas is preparing to raise prices for U.S. consumers in response to rising costs tied to new tariffs introduced by former President Donald Trump. According to the company, these tariffs are expected to cost Adidas around €200 million ($231 million) in just the second half of the year. The financial burden comes after a newly negotiated trade agreement between the U.S. and the European Union that sets import duties at 15%.
Impact on U.S. Sales and Market Reaction
Although Adidas reported a strong operational performance for the second quarter—posting a 58% jump in operating profit to €546 million, well above expectations—the U.S. market continues to underperform. As news of the expected price increases and stagnant U.S. growth spread, investors reacted negatively. The company’s stock dropped over 8% in morning trading, erasing around €3 billion in market capitalization and hitting its lowest level since early April.
Concerns Over Inflation and Consumer Demand
Adidas CEO Bjorn Gulden expressed concerns about the potential inflationary effects of the tariffs. He warned that if prices rise significantly, consumer demand in the U.S. could weaken further. “Higher prices reduce consumers’ willingness to spend,” Gulden noted, acknowledging the challenge of passing the cost on to shoppers without dampening sales.
Solid Global Growth Offsets Regional Weakness
Despite the concerns in the U.S., Adidas posted encouraging global numbers. Currency-adjusted revenue increased by 8% year-over-year, although the weak dollar reduced the Euro-denominated growth to just 2%, with total revenue reaching €5.95 billion—short of the €6.15 billion expected by analysts. The company saw double-digit percentage gains in all regions except Europe, fueled by strong demand for both apparel and footwear. Favorable fashion trends, reduced discounting, and lower production and shipping costs all contributed to the positive performance.
Outlook Remains Steady Despite Challenges
In light of growing uncertainty tied to international trade disputes—especially with key manufacturing countries like China and Vietnam—Adidas opted not to revise its full-year guidance upward. The company continues to project a high-single-digit revenue increase and an operating profit between €1.7 billion and €1.8 billion. Gulden explained, “Under normal conditions, we would feel confident raising our outlook, but in today’s volatile environment, that wouldn’t be prudent.”
Investor Disappointment Over Unchanged Forecast
The decision to hold guidance steady came as a disappointment to some investors who had expected stronger full-year projections given the solid quarterly results. As a result, Adidas shares slid more than 8% in early trading, marking one of the sharpest drops in recent months. Market analysts, including those at Jefferies, noted that the unchanged profit forecast raised concerns about potential disruptions in wholesale demand going forward.
Conclusion: Uncertainty Clouds Strong Fundamentals
While Adidas remains confident it can meet its financial targets for 2025, the looming threat of U.S. tariffs and global market volatility adds a layer of risk. “We are confident for now,” Gulden said, “but things could shift quickly—positively or negatively—depending on how external pressures evolve.” For now, the sportswear giant is walking a fine line between resilience and risk as it navigates an increasingly complex global trade landscape.
