Adidas prepares for a $230 million revenue reduction in the second half of the year due to tariffs
Adidas Capitalizes on Competitors' Struggles Amid Tariff Challenges
In the dynamic world of sports apparel, Adidas is making significant strides, as its competitors Nike and Puma grapple with sales declines and financial hurdles.
According to recent reports, Adidas is capitalising on this moment by boosting its marketing investments and focusing on product innovation. The company has not cancelled any orders from retailers, despite the challenging market conditions.
In the second quarter, Adidas' sales grew impressively, with a 12% increase in currency-neutral terms, excluding Yeezy sales, and an 8% increase including them. This growth is a testament to Adidas' strategic approach in managing tariff impacts and price adjustments.
Adidas is sharing tariff costs with suppliers and retailers, avoiding broad price increases outside the U.S., and relying on higher-priced new product releases to offset added costs. This strategy is helping Adidas maintain lower price points, preserving volume, and gaining market share.
CEO Bjørn Gulden emphasised the importance of this strategy, stating, "It's important not to run away from lower price points and not to believe that price increases can do less volume." He also highlighted that tariff-driven price hikes in the U.S. would not apply to other markets like Germany.
In contrast, Puma has reported a significant sales decline and reduced profit forecasts, largely due to tariff impacts and slowing demand. The company expects tariffs to reduce gross profit by around €80 million this year and has lowered its full-year outlook, including expecting a loss in EBIT.
Nike, too, is experiencing sales declines and the lowest income since 2020, largely due to macroeconomic challenges and tariffs. The company is expected to lead with price increases in the U.S. market. Adidas' CEO anticipated Nike would initiate price hikes, and Adidas would follow, sharing tariff burdens carefully rather than passing them fully to consumers.
Despite these challenges, Adidas is making inroads in its local strategy, especially in the U.S., where it is investing more in American athletes and college sports. The company is also taking advantage of local sports trends like pickleball in the U.S. and padel in Europe.
Adidas' footwear, its largest category, was up 9% in Q2, while accessories grew 7%. GlobalData apparel analyst Tom Ljubojevic noted Adidas' currency-neutral growth in apparel, up 17% in Q2.
Despite the positive growth, Adidas has warned of increasing volatility and risk due to the Trump administration's policies. The company expects a 200-million-euro hit to its product costs in the second half of the year due to tariffs.
Despite these challenges, Gulden remains optimistic about the future, predicting a stronger low-profile footwear trend in 2026 than it is this year. No order cancellations have been seen from retailers yet, indicating a continued faith in Adidas' strategic approach.
- In the realm of marketing strategies within the sportswear industry, Adidas is pioneering by increasing investments in advertising and product innovation.
- Despite the fiscal struggles of competitors like Nike and Puma, Adidas is careful to manage tariff impacts and price adjustments, avoiding broad price increases.
- In the music of corporate finance, Adidas is skillfully sharing tariff costs with suppliers and retailers, preserving lower price points and gaining market share.
- Meanwhile, lifestyle competitors such as Puma experience selling declines due to challenges like tariffs and sluggish consumer demand.
- In the interwoven fabrics of business and technology, Adidas anticipates artificial intelligence and data-driven insights will play a significant role in future strategic decisions.
