Adidas cautions of possible price increases due to Trump tariffs

The recent announcements of potential tariffs by the Trump administration have caused concern, and Adidas has expressed worries about the impact of these tariffs on the prices for consumers. Despite reporting positive first-quarter sales results with a 13% increase compared to the previous year, the German sportswear retailer has refrained from revising its full-year guidance due to the uncertainties surrounding the U.S. tariffs.

Adidas noted that under normal circumstances, the company would have updated its outlook for the full year, indicating growth in both revenues and operating profit. However, the uncertainty around U.S. trade policies, particularly tariffs, has led to a delay in increasing the forecast. The retailer maintained its previous guidance for 2025, expecting sales to rise at a high-single-digit rate. CEO Bjorn Gulden, during an earnings call, clarified that although the company has not currently planned any price hikes, it may be forced to do so if the delayed tariffs come into effect.

Adidas has shifted its manufacturing focus to countries like Vietnam, a critical sourcing hub that has been less affected by the U.S.-China trade tensions. Although the company has minimized its reliance on Chinese imports to reduce exposure to high tariffs, the potential tariffs could still impact costs of Adidas products in the U.S. market. Gulden, in the earnings release, emphasized that the uncertainty around trade negotiations makes it challenging to predict the final tariffs and their implications.

Following the trend set by other companies like Delta, PepsiCo, and Skechers, Adidas refrained from revising its guidance due to the heightened external volatility and macroeconomic risks caused by trade policy uncertainties. Gulden highlighted that the majority of Adidas sales occur outside the U.S., lessening the direct impact of U.S. tariffs. However, the company remains cautious about potential negative repercussions on the brand and the U.S. consumer if tariffs continue to escalate.

Despite the concerns over tariffs and their impact on business operations, Adidas saw significant growth in its footwear category, driven by strong performance in its Originals, sportswear, and running lines. The three-stripes brand experienced continued popularity in various styles, prompting the introduction of new models to meet consumer demand. Gulden emphasized that while Adidas has yet to witness reduced demand due to tariffs, the uncertainty surrounding the situation could exert pressure on the brand and necessitate pricing adjustments.

In conclusion, the current trade environment, characterized by escalating tariffs and uncertainty, poses challenges for companies like Adidas. As they navigate these complex conditions, businesses must remain vigilant about potential price impacts, operational challenges, and the overall business outlook. Despite ongoing uncertainties, maintaining a cautious stance, complying with regulations, and closely monitoring developments remains crucial for companies like Adidas to weather the storm of global trade volatility.