Sportswear Giant Adidas On Tuesday, US President Donald Trump’s tariffs would lead to rising costs for all US products.
The company said it doesn’t know yet how much prices will rise, and said the global trade dispute is preventing it from raising its full-year outlook despite the increase in first-quarter profit bumpers.
“Higher tariffs will ultimately cause higher costs for all products aimed at the US market,” Adidas said in a statement.
The company said it was “slightly exposed” to Beijing’s White House tariffs (now at 145% effectiveness), but it said it was minimizing exports of Chinese-made products. However, he said the biggest impact came from a general increase in US tariffs on all other countries.
“We don’t know what the final tariffs will be, given the uncertainty regarding negotiations between the US and the various exporters,” Adidas’ statement continued.
“Therefore, we cannot make a ‘final’ decision about what to do. The increased costs due to increased tariffs ultimately lead to price increases in our sector, but it is impossible to quantify these or close the impact of the product on consumer demand. ”
Adidas said it cannot produce almost all of its products in the US at the moment.
The company, best known for its sneakers such as Superstar, Sambas, Stan Smith, Gazelle and Sportswear, uses factories in countries including Vietnam and Cambodia.
A similar dilemma about price hikes and the impact of demand faces almost every retail business serving the United States, from ultra-low-cost electronic retailers like Temu to luxury giants like Hermès.
Revenues improve
Without the US tariff cloud, Adidas would raise its full-year outlook for revenue and operating profits due to strong purchase orders and positive brand sentiment, the company said. Instead, he reaffirmed the existing outlook, but said that “the range of possible outcomes is increasing.”
In pre-released results, net profit from continuing operations jumped 155% in the first quarter, increasing to 436 million euros ($496.5 million), surpassing the consensus forecast of 383 million euros compiled by LSEG. Net sales rose 12.7% to 61.5 billion euros as its operating margin rose 3.8 percentage points to 9.9%.
The company has finally shook a long-standing headache from a collaboration with controversial musician YE. Last month, it was announced that it had sold the last Yeezy stock.
An analyst at Deutsche Bank said in a memo on Tuesday that Adidas “provided good prints that the company has advanced in all areas,” despite high uncertainty.
“To date, adidas has seen double-digit sales growth across all regions and channels. Wholesale of offerings to consumers outweighs the direct delivery of consumers,” said Mamta Valchha, consumer discretionary analyst at Quilter Cheviot, in a memo.
“Footwear continues to be a strong performer, and consumers are choosing lifestyle clothing, but the performance category continues to work. Adidas hopes these trends continue in the face of economic uncertainty created by US tariffs, but unfortunately we must wait and see before the full impact passes.”
