Increase in U.S. prices for Adidas products due to tariffs imposition
Sneaker titan Adidas is grappling with a significant hurdle as US tariffs surge in 2025, despite a phenomenal Q1 performance. Here's a breakdown of the situation:
Financial triumph in Q1 2025
- Boosting revenues: Sales soared by 13%, with footwear leading the way at a spectacular 17% year-on-year growth, powered by popular classics like the Gazelle, Samba, and collaborations on models such as the Megaride and Goukana.
- Rising profits: The net income skyrocketed 155%, surpassing predictions, thanks to a robust e-commerce performance (excluding Yeezy) and a 13% boost in North American market share.
Tariff troubles
- Cost crunch: Adidas is bracing itself for increased product costs in the US due to potential tariffs on imports from manufacturing hotspots like Vietnam and Cambodia (estimated at over 40%). CEO Bjørn Gulden asserted that the jump in tariffs would inevitably lead to higher costs for all products in the US market.
- Uncertainty reigns: Adidas cites the inability to pinpoint exact cost increases or predict consumer demand shifts due to ongoing US trade negotiations. This unpredictability has caused CEO Bjørn Gulden to hold back the full-year outlook despite impressive results.
Strategic representation
- Product powerhouse: Adidas' lifestyle segment remains a key strength, with evergreen designs and new collaborations keeping consumers hooked, while competitors such as Nike appear to struggle more.
- Regional turbulence: Although US tariffs are front and center, the broader global trade landscape under current policies—including 145% tariffs on Chinese goods—presents additional risks. The diversified manufacturing base may, however, help soften the blow of country-specific tariffs.
Future predictions
Adidas expects price increases in the US but has yet to specify the timing or extent. The company's continued growth hinges on balancing rising costs with consumer demand, relying on its strong brand equity and innovative product development. Analysts remain somewhat optimistic given the current momentum compared to sector peers.
- Initiated by the surge in US tariffs in 2025, Adidas is grappling with potential increased costs on products imported from manufacturing hotspots like Vietnam and Cambodia, with CEO Bjørn Gulden asserting that these tariffs would inevitably lead to higher costs for all products in the US market.
- Despite the boost in revenues by 13% and net income skyrocketing 155% in Q1 2025, Adidas is uncertain about exact cost increases and potential shifts in consumer demand due to ongoing US trade negotiations, causing CEO Bjørn Gulden to hold back the full-year outlook despite impressive results.
- Rather than struggling with product development like competitors such as Nike, Adidas' lifestyle segment remains a key strength with its evergreen designs and new collaborations keeping consumers engaged, while the broad global trade landscape under current policies presents additional risks.
- As Adidas expects price increases in the US, the company's continued growth hinges on its ability to balance these rising costs with consumer demand, relying on its strong brand equity and innovative product development, with analysts remaining somewhat optimistic given the current momentum compared to sector peers.
