Adidas is under pressure to raise prices due to high tariffs imposed by the US, and the CEO warns that the Samba and Campus shoes might be affected.

The German sports brand Adidas experienced a 155% increase in net profit and a 12.7% increase in revenue in the first quarter of 2025. However, as a result of the high import tariff policies implemented by former U.S. President Trump, CEO Björn Gulden warned that the prices of shoes such as the Samba and Campus models might increase in the U.S. Given the uncertainty surrounding tariff policies, Adidas has not adjusted its full-year financial forecast and stated that it is unable to predict how price increases will affect consumer demand.

Tariff Pressure Forces Adidas to Consider Raising Prices in the U.S.

Adidas CEO Björn Gulden noted in the latest financial report meeting that the high tariffs imposed by the U.S. on global imports have created substantial cost pressures for the company. Since Adidas is nearly unable to manufacture products domestically in the U.S., all goods supplied to the U.S. market must be imported from Asia, making it inevitable for the company to bear the tariff cost burden.

"Higher tariffs will ultimately lead to increased costs for all our products sold in the U.S. market," Gulden stated. "Currently, we cannot determine what the final tariffs will be, nor can we make any final decisions."

Currently, the U.S. imposes tariffs of up to 145% on Chinese-made goods. Although Adidas has minimized the proportion of Chinese-made products exported to the U.S., it is still "partially exposed" to the risk of high tariffs. More challenging is that the U.S. also generally imposes a 10% base tariff on goods from other major production countries, including Vietnam, Indonesia, and Cambodia, and plans to further increase it after July. These countries are Adidas's main manufacturing bases.

Best-Selling Shoes Samba and Campus First to Be Affected

Adidas specifically mentioned that its classic shoe models, such as Samba and Campus, may experience price hikes due to rising costs. These shoes have a broad consumer base in the U.S. market, and price changes could impact brand image and sales performance.

However, market research firm Third Bridge analyst Yanmei Tang pointed out that compared to competitors like Nike and Hoka, Adidas has less flexibility in price adjustments. Core shoe models like Superstar and Gazelle are highly price-sensitive, leaving limited room to pass on cost pressures, posing a greater challenge for Adidas in dealing with tariff impacts.

Strong First Quarter Performance but No Full-Year Forecast Upgrade

Despite facing tariff pressures, Adidas's first-quarter financial performance exceeded market expectations. According to the company's released data, net profit for the quarter ending March 31, 2025, increased by 155% year-on-year to 436 million euros (approximately 497 million dollars), surpassing the market expectation of 383 million euros. Revenue grew by 12.7% year-on-year to 6.15 billion euros, with the operating profit margin rising to 9.9%.

In terms of regional markets, revenue in Europe grew by 14%, Greater China by 13%, and Latin America by 26%. The North American market only grew by 3%, mainly due to the gradual discontinuation of the Yeezy series shoes in collaboration with the controversial artist Ye, formerly known as Kanye West. However, the company has successfully cleared Yeezy inventory, ending years of brand shadow.

Despite the strong performance, Adidas chose to maintain its original full-year financial forecast. Gulden stated, "Normally, we would have increased our revenue and profit forecasts, but the current tariff uncertainty prevents us from making clear plans."

Tariff Uncertainty Hinders Future Planning

Adidas stated that it is currently unable to predict the final direction of tariff policies or quantify the impact of price increases on consumer demand. Gulden admitted, "Although we have not yet seen a significant decline in consumer demand due to tariffs, this uncertainty prevents us from confidently making future plans."

Additionally, Adidas pointed out that although the U.S. tariff policy on countries like Vietnam and Indonesia has been postponed until July, it has already caught sports brands that rely on the Southeast Asian supply chain off guard. The company stated that it will continue to strive to provide U.S. retailers and consumers with products at the most reasonable prices while strengthening performance in other markets to compensate for the uncertainty in the U.S. market.

2025 Full-Year Outlook Remains Unchanged

For the 2025 full-year outlook, Adidas expects revenue to grow by high single-digit growth (approximately 5% to 9%) on a currency-neutral basis, with operating profit estimated to be between 1.7 billion and 1.8 billion euros (approximately 1.94 billion to 2.05 billion dollars). The company emphasized that although the current global market performance is stable, the range of outcome variability is broader, and there is still downward pressure for the full year.

Analysts generally gave positive evaluations of Adidas's first-quarter performance. Deutsche Bank noted that despite the challenging overall environment, Adidas has made progress in all business areas. Quilter Cheviot analysts believe that Adidas continues to be favored by consumers in the footwear and casual apparel sectors, showing strong resilience.

References

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