Adidas Faces 200 Million Euro Impact from Tariffs Amidst Growth Plans

Adidas is bracing for significant financial implications due to current tariff rates, estimating a decrease of 200 million euros (approximately $230 million) in product costs for the latter half of the year. This projection comes as the company reported millions in tariff-related impacts during the second quarter, highlighting the ongoing pressure from international trade policies. Despite these challenges, Adidas has reaffirmed its forecast for the fiscal year, predicting double-digit growth excluding the Yeezy brand and high-single-digit growth when including it. However, the company cautioned investors about heightened uncertainty stemming from the policies set forth by the Trump administration, indicating that “the range of possible outcomes remains increased.” In its second-quarter report, Adidas revealed a 2% rise in revenue, reaching approximately 6 million euros. The strong euro and competitive market conditions contributed to a slower growth rate, although sales in currency-neutral terms reflected an increase of 12% when excluding Yeezy products and 8% when they were included. As competitors like Nike and Puma navigate their own sales declines, Adidas seeks to enhance its brand presence by boosting marketing investments and allowing rivals to set price hikes in the U.S. market. CEO Bjørn Gulden emphasized the importance of maintaining competitiveness and stated, “It is very, very important that you don’t run away from the lower price points and believe you can just raise prices and do less volume.” Gulden mentioned that he expects Nike to initiate any market-wide price increases, and while Adidas plans to share the burden of tariffs with suppliers and retailers, they will also introduce new products at higher price points to buffer against increased costs. He confirmed, “We have not canceled one order,” distinguishing Adidas from others that have retracted inventory in response to market conditions. Adidas sees an advantageous shift in consumer preferences, particularly with the continuation of the low-profile footwear trend. This insight comes as the company aims to revitalize its iconic Superstar sneaker through various marketing collaborations and promotions. Adidas’ overall strategy appears to be gaining traction, with GlobalData analyst Tom Ljubojevic observing that “While the reported sales figure shows a slowing of Adidas’ recent momentum, its currency-neutral growth highlights a continuing strong appetite among consumers.” In terms of sales categorization, the apparel segment has surged by 17% in currency-neutral terms during Q2, with footwear—the largest category for Adidas—expanding by 9%. Accessories also showed positive growth, increasing by 7%. Gulden remarked on the resilience of U.S. demand, noting, “We haven’t seen the demand in the U.S. going down yet but the price increases haven’t been yet either.” Furthermore, the company's strategy to deepen its local engagement is becoming more pronounced, as evidenced by recent investments in American athletes and plans to enhance its presence in college sports and emerging local sports trends. Recommended Reading Lululemon to raise prices as progress stalls in the US