Impact of U.S. Tariffs on Pricing

Adidas announced on Tuesday that anticipated tariffs from the U.S. government under President Donald Trump’s administration would likely lead to increased prices across its product range in the United States.

Although the company has not determined the exact increase, it expressed concerns that the ongoing global trade dispute hampers its ability to confidently modify its financial outlook for the year, despite reporting substantial profit growth in the first quarter.

“Higher tariffs will eventually cause higher costs for all our products for the US market,” Adidas stated in a press release.

The company noted that it has minimized exports of products manufactured in China in response to current tariffs exceeding 145%. However, it faces the most significant challenges from the overall increase in U.S. tariffs, which are largely set at 10% as negotiations continue.

“Given the uncertainty around the negotiations between the US and the different exporting countries, we do not know what the final tariffs will be,” the statement added, emphasizing the unpredictability of the situation.

Adidas currently produces very few goods domestically and relies heavily on countries like Vietnam and Cambodia, which are also subject to rising tariffs in the absence of a favorable trade agreement.

Broader Retail Sector Concerns

The challenges posed by tariff-induced price hikes are affecting countless retailers across the U.S., from budget-friendly e-commerce platforms to luxury brands. Many companies are grappling with the potential impact on consumer demand as they consider raising prices.

Positive Earnings Amidst Challenges

Despite the tariff-related uncertainties, Adidas saw a remarkable improvement in its financial performance. The company reported a 155% rise in net income from continuing operations for the first quarter, reaching 436 million euros (approximately $496.5 million), surpassing analysts’ forecasts.

Net sales grew by 12.7% to 6.15 billion euros, while the operating margin jumped by 3.8 percentage points to 9.9%.

Adidas has reported strong order volumes and positive consumer sentiment, but it has chosen to maintain its yearly revenue and profit outlook in light of the tariff situation, noting an increased range of potential outcomes.

The company has managed to distance itself from past controversies, including its partnership with the musician Ye, concluding the sale of remaining Yeezy inventory last month .

According to analysts from Deutsche Bank, Adidas continues to make progress in various sectors, displaying double-digit sales growth across regions and distribution channels, with footwear and lifestyle clothing remaining particularly popular.

“Adidas will hope these trends continue in the face of the economic uncertainty created by tariffs in the US,” stated Mamta Valechha, a consumer discretionary analyst at Quilter Cheviot, adding that the full impact of tariffs is yet to be seen.