Adidas holds back on profit upgrade due to tariff uncertainty

[LONDON] German sportswear maker Adidas held back on Tuesday (Apr 29) from raising its 2025 financial forecasts despite strong first-quarter results, saying the uncertainty around US import tariffs was making it difficult to make predictions and plan.

CEO Bjorn Gulden said that “in a normal world” the company would have hiked its revenue and profit guidance after last week’s quarterly results, but tariff uncertainty prevented it from doing so.

To mitigate the impact, Adidas front-loaded products to clear US customs before tariffs that took effect on Apr 4 and Apr 9, and re-routed products made in China meant for the US to other markets instead, Gulden said in a conference call with journalists.

Adidas will also try to compensate for uncertainty in the US by boosting its performance in the rest of the world, Gulden added.

“You could ironically say that not being so dependant on the US now is an advantage for us compared to maybe companies that are more American,” he said, a remark pointing to its bigger US rival Nike.

Adidas said the blanket 10 per cent increase in US tariffs will eventually cause price increases across its products, but it is impossible to quantify those or to establish the likely impact on US consumer demand, highlighting the paralysis caused by trade uncertainty.

Adidas had already reduced exports of China-made goods to the US to a minimum, but is still “somewhat exposed” to much higher US tariffs on Chinese goods, Gulden said, though it is unclear how long those might remain at the current level.

“Given the uncertainty around the negotiations between the US and the different exporting countries, we do not know what the final tariffs will be. Therefore, we cannot make any ‘final’ decisions on what to do,” Gulden said.

High US tariffs on South-east Asian countries such as Vietnam and Indonesia – announced on Apr 2, but paused until July – blindsided sportswear brands, which make most of their sneakers and clothing there.

“We hope and work on the assumption that these higher duties will not come back,” Gulden said in the press conference.

First-quarter sales rose 14 per cent in Europe and 13 per cent in Greater China, where Gulden said Adidas is gaining market share from rivals. Sales in North America increased just 3 per cent, which Adidas said was due to the phase-out of its Yeezy sneaker line.

While sticking to its full-year guidance, Adidas said the range of possible outcomes was wider now and uncertainty could put negative pressure on its results later in the year.

Adidas expects currency-neutral sales for 2025 to increase at a “high-single-digit” rate – between 5 per cent and 9 per cent – and operating profit to rise to between 1.7 billion euros (S$2.5 billion) and 1.8 billion euros.

Sales of running shoes and clothes improved in the first quarter, Adidas said, as it tries to better compete against newer brands like On and Hoka that have gained in popularity at the expense of Nike and Adidas.

Adidas-sponsored athletes won both the women’s and the men’s race at the London Marathon on Sunday, Gulden pointed out, helping boost the credentials of Adidas running shoes.

Shares in the company were up 0.5 per cent in early trade. REUTERS