Frankfurt (Germany) (AFP) – German sportswear giant Adidas warned Wednesday that it might raise prices in the United States due to tariffs that could cost it an extra 200 million euros ($230 million) this year. Shares in the world’s number two sports outfitter plunged more than eight percent in Frankfurt after the warning about US President Donald Trump’s tariff blitz and weaker than expected sales. The maker of the popular Samba and Gazelle trainers reported a hit for the April-June period in the “double-digit euro millions” from tariffs, without giving a specific figure.
It warned the levies would add around 200 million euros to its costs in the second half of the year and also signalled there was much uncertainty ahead. “We still do not know what the final tariffs in the US will be,” CEO Bjorn Gulden said in a statement, warning that they could hit demand in the world’s biggest economy. “We do also not know what the indirect impact on consumer demand will be should all these tariffs cause major inflation,” he added. He later told an earnings call that the group, second only to Nike among global sportswear companies in terms of sales, had not made a final decision on whether to hike prices in the United States. But he said that when “we know the final duties then there will be a pricing review to see what products we might take up in price, have to take up in price.” “The price increases, if any, will only be in the US,” he added.
Adidas is particularly exposed to the trade tensions sparked by Trump’s tariffs barrage as it has a sprawling global supply chain and makes its products in countries facing hefty US levies, including Vietnam and Indonesia.
The tariff turmoil is taking the sheen off an otherwise strong recovery for Adidas, which had been getting back on its feet after the collapse of its lucrative tie-up with US rapper Kanye West. It reported another strong increase in net profits for the second quarter, jumping 90 percent to 369 million euros. But sales, up two percent to 5.9 billion euros, advanced more slowly than expected, disappointing investors. The group stuck to its previous forecast for operating profit to increase by 1.7 billion to 1.8 billion euros for the full year. It warned however of a “range of possible outcomes,” with results potentially coming in better than expected but also worse because of the US trade turmoil.
The split in 2022 with rapper West, with whom Adidas designed the popular line of Yeezy trainers, robbed the company of a vital revenue stream and left it saddled with a huge stock of unsold inventory. But they have sold off the shoes, and Gulden has managed to start turning Adidas’s fortunes around by steps including promoting classic trainers.
Trump earlier this year introduced sweeping tariffs on almost all US trading partners, as well as on specific sectors, though he paused higher rates to allow for talks. His administration has already struck deals with some partners, including the European Union, but dozens are set to face higher levies from Friday if they fail to reach accords.
© 2024 AFP
