Adidas reports a sales increase despite impending tariffs, highlighting a shifting market landscape.
Adidas Announces Price Hike Amid Surge in US Tariffs
Adidas Announces Price Hike Amid Surge in US Tariffs
US tariffs projected to raise costs by €200m prompting Adidas to raise prices for American consumers.
Adidas, the renowned German sportswear company, has indicated that the rising costs due to US tariffs will amount to an additional €200 million (£173 million), leading to higher prices for US consumers. CEO Bjorn Gulden disclosed during their recent earnings call that nearly 50% of the company's products originate from Asian countries, which have recently forged trade agreements with the US. He stated that the tariffs "will directly increase the cost of our products for the US," expressing uncertainty over how these increases might affect demand amidst potential inflation triggers.
The primary producers of Adidas goods are Vietnam and Indonesia, supplying 27% and 19% of products, respectively. Recent trade negotiations with the US have resulted in a 20% tariff on imports from Vietnam and a 19% tariff on items from Indonesia. Consequently, US companies distributing Adidas products face the burden of these additional costs. This echoes similar actions taken by Adidas' competitor, Nike, which reported price increases on American products due to tariffs that could add around $1 billion (£730 million) to its operational expenses.
Adidas has noted that the tariffs have already begun impacting business, projecting an estimated €200 million increase in costs for the remainder of the year. Despite these challenges, the company reported a 7.3% rise in sales, reaching €12.1 billion in the first half of the year, alongside a surge in pre-tax profits from €549 million to €1 billion. The second quarter saw a notable 9% increase in footwear sales, with clothing sales soaring by 17%.
In a broader context, the situation reflects ongoing tensions in global trade, with former President Trump's trade tariffs aimed at encouraging US manufacturing. The tariffs have already placed significant strains on various sectors, leading to warnings as companies like Aston Martin and Stellantis outline diminishing profits due to the burdens of these new tariffs.
