Adidas preparing for a $230 million import duty impact in the latter part of the year.
Adidas Braces for €200 Million Tariff Hit Amidst U.S. Market Challenges
Adidas, the renowned German sportswear giant, is facing a significant financial hurdle in the second half of 2025 due to newly imposed U.S. tariffs. The company anticipates an added cost of approximately €200 million ($228-$230 million) by the end of the year, primarily from tariffs on products sourced from Vietnam and Indonesia, Adidas' second- and third-largest suppliers, respectively [1][2][3].
These tariffs, amounting to around 19-20%, have already left a financial mark on Adidas' second-quarter results. Despite reporting a 58% year-over-year increase in operating profit (€546 million) and 12% currency-neutral revenue growth, the tariff-related costs contributed to revenue missing analyst expectations, leading to a 11% drop in the company's share price following the tariff disclosure [1][3][5].
In response to these increased costs, Adidas is considering raising product prices in the U.S. market, although the size and timing of these price hikes remain undecided [1][2]. CEO Bjørn Gulden has expressed concerns about potential negative consumer reactions to price increases but indicated that Adidas might follow competitors' strategies regarding price adjustments [1]. So far, price changes are limited to the U.S., and global pricing remains unaffected [1][2].
Despite the tariff challenges, Adidas remains optimistic about its full-year financial outlook, buoyed by strong brand momentum, double-digit growth across channels, and improved gross margins [3][5]. The company is also focusing on expanding in other markets and product categories to offset tariff-driven cost pressures [3][5].
In other developments, Adidas is making inroads in its local strategy, especially in the U.S. The company plans to have a more meaningful presence in college sports in the U.S. and take advantage of local sports trends like pickleball in the U.S. and padel in Europe [1]. Adidas is also capitalizing on its competitors' sales declines by increasing marketing investments [1].
Footwear, Adidas' largest category, saw a 9% growth in Q2. The company is also experiencing strong growth in its apparel and accessories segments, with currency-neutral growth in apparel up 17% in Q2 and accessories growing 7% [1].
As Adidas navigates these challenges, it continues to invest in signing American athletes in the past six months [1]. The company is also relaunching its popular Superstar shoe [1]. Despite the tariff-related costs, Adidas has not experienced any order cancellations from retailers [1].
Looking ahead, Gulden expects the low-profile footwear trend to be stronger in 2026 than it is this year [1]. With Nike expected to lead price increases in the market, Adidas may follow suit [1]. However, Gulden has stated that Adidas will not pass on the costs of tariffs to consumers in other markets [1].
In conclusion, Adidas is facing a €200 million tariff burden in the second half of 2025, primarily from U.S. tariffs on imports from Vietnam and Indonesia. The company is considering raising product prices in the U.S. market to mitigate these costs, while maintaining its full-year financial outlook and focusing on expanding in other markets and product categories.
- The U.S. market challenges, including tariffs, have led Adidas to entertain the idea of elevating product prices within the United States, yet the specifics of the price hikes and their timing are still undecided.
- Adidas, despite the financial pressure from tariffs, remains optimistic about its full-year financial projections, fueled by the strength of its brand, double-digit growth across channels, and improved gross margins.
- In addition to addressing domestic issues, Adidas is also concentrating on expanding in other markets and diversifying its product portfolio to counterbalance the tariffs-induced cost pressures.
- The sports apparel industry giant is making headway in its local strategy, particularly in the U.S., aiming for a more substantial presence in college sports and leveraging emerging sports trends such as pickleball in the U.S. and padel in Europe.
- With a focus on various sectors, Adidas is witnessing growth not only in footwear (experiencing a 9% growth in Q2) but also in apparel and accessories, with Q2 currency-neutral growth in apparel at 17% and accessories rising by 7%.
- As Adidas actively signs American athletes and relaunches popular models like the Superstar shoe, it is concurrently coalescing with no order cancellations from retailers in the face of tariff-related costs.
