Shares in Adidas fell by 6% on Wednesday after the German sportswear company warned that new U.S. tariffs will significantly raise its costs and potentially lead to price increases for consumers in the American market. The company reported that tariffs had already caused a double-digit million euro hit in the second quarter and projected that related costs could rise to €200 million ($231 million) in the second half of the year.
Adidas CEO Bjørn Gulden stated that management is reviewing pricing strategies in response to the tariffs, with any potential price increases limited to the United States. He added that no final decisions would be made until the exact tariff rates are confirmed, expected around August 1.
The company expressed concern about the broader economic impact, including the risk that the tariffs could drive inflation and reduce consumer demand. Nearly half of Adidas products are manufactured in Asia, with Vietnam and Indonesia accounting for a combined 46% of production. Both countries are now subject to newly imposed U.S. tariffs, with rates of 20% and 19% respectively.
Tariff costs linked to Vietnam and Indonesia product sourcing
These new levies bring the total tariff on footwear imports from Vietnam to 46%, up from 26%, and from Indonesia to 43%, up from 24%. Despite these challenges, Adidas maintained its full-year forecast, anticipating high single-digit growth in currency-neutral sales and operating profit between €1.7 billion and €1.8 billion.
However, the company noted that this guidance could be revised depending on the evolving tariff environment and other macroeconomic risks. In its latest financial report, Adidas posted second-quarter revenue of €5.95 billion, representing a 2.2% increase in euro terms compared to the same period last year.
Lifestyle segment boosts growth amid broader market softness
The figure came in below analysts‘ expectations of €6.23 billion. Operating profit rose 58% to €546 million, surpassing forecasts. The company attributed a €300 million revenue shortfall to negative currency effects linked to a weaker U.S. dollar and Chinese yuan. Sales performance in the United States was notably soft during the quarter, although globally the company reported a 9% increase in footwear revenue and a 17% rise in apparel sales.
Lifestyle product sales, including models like the Samba and Gazelle, grew by 13%, boosted by new colorways and marketing collaborations. To mitigate the impact of tariffs, Adidas increased its product shipments to the U.S. ahead of the new levies, which contributed to a 16% rise in inventory levels, now totaling €5.26 billion.
Despite current challenges, the company reaffirmed its commitment to the U.S. market, which represents about 20% of its global business. Adidas shares have declined over 20% since the start of 2025. Analysts suggest that continued uncertainty over trade policy and weakening momentum in the U.S. could weigh on future investor sentiment. – By Content Syndication Services.