Adidas anticipates a $230 million blow from tariffs in the second half of the year
Adidas Navigates Tariff Challenges and Maintains Growth
Adidas, the German sportswear giant, has been affected by the increased tariffs imposed under the Trump administration, particularly those targeting imports from countries like Vietnam, Indonesia, and Cambodia. The company expects an additional expense of around €200-231 million ($223 million USD) in the second half of 2021, a significant blow to its financial performance.
Despite this setback, Adidas has managed to show strong underlying sales growth and profitability earlier in the year. To offset the higher costs, the company has focused on price increases in the U.S. market, although it acknowledges uncertainty around how these price changes might affect consumer demand.
In response to the tariff-related challenges and the resulting volatility and risks, Adidas has maintained a stable full-year revenue and operating profit outlook. The company has also improved operational efficiency, as reflected in a rise in its gross margin and operating profit despite these headwinds.
In the U.S. market, Adidas is making inroads with a more meaningful presence, investing more in American athletes and taking advantage of local sports trends like pickleball. The company is also relaunching its popular Superstar shoe, including activations and collaborations.
In the second quarter, Adidas' revenue grew by 2% to approximately 6 million euros. In currency-neutral terms, sales were up 12% excluding Yeezy sales and up 8% including them. The company's largest category, footwear, saw a 9% increase, while accessories grew 7%.
Adidas has not canceled any orders from retailers and plans to share the costs of tariffs with suppliers and retailers. The company is also taking steps to offset these costs by dropping new products at higher prices.
As for the competition, Nike is expected to lead price increases in the U.S. market, with Adidas following suit. Meanwhile, rival Puma recently reported a sales drop and a guidance cut. In response, Adidas is planning to increase marketing investments while Puma focuses on cost-cutting measures.
Looking ahead, Adidas' CEO, Bjørn Gulden, expects the low-profile footwear trend to be stronger in 2026 than it is this year. He also noted Adidas' currency-neutral growth in apparel, with a 17% increase in Q2.
In summary, Adidas has been negatively impacted by tariffs, but the company has employed strategic steps to navigate this environment. By focusing on price adjustments, controlled expenses, and relying on global growth trends, Adidas has managed to sustain overall profitability under increasing geopolitical and trade-policy volatility.
- Adidas, amidst challenges from tariffs and volatile trade policy, continues to invest in American athletes and leverage local sports trends, such as pickleball, in the U.S. market.
- Amidst increased tariffs and costs, Adidas plans to offset expenses by sharing the tariff burden with suppliers and retailers, as well as introducing new products at higher price points.
- In the fashion industry, both Adidas and its competitor Nike are expected to lead price increases in the U.S. market, with Adidas following suit, while Puma responds by focusing on cost-cutting measures.
- Despite the financial strain from tariffs, Adidas' CEO, Bjørn Gulden, remains optimistic about the future, predicting the low-profile footwear trend to be stronger in 2026 than it is today, and seeing continued growth in Adidas' apparel.
- Adidas' strategic steps, such as focusing on price adjustments, controlled expenses, and relying on global growth trends, enable the company to maintain overall profitability in a tumultuous geopolitical and trade-policy landscape.
