Home / Business and Economy / Adidas Braces for $218M Tariff Hit, Warns of Profit Squeeze
Adidas Braces for $218M Tariff Hit, Warns of Profit Squeeze
30 Jul
Summary
- Adidas CEO says tariffs will directly increase product costs in the US
- Tariffs could cost Adidas 200 million euros in the second half of 2023
- Adidas wary of its bullish 2025 outlook due to "volatility and uncertainty"
In a recent development, Adidas has become the latest company to announce plans to raise prices in the US due to the impact of tariffs. According to Adidas CEO Bjørn Gulden, the "latest iteration of tariffs will directly increase the cost of our products for the US," potentially costing the company 200 million euros, or around $218 million, in the second half of 2023.
Gulden also revealed that Adidas faced a "negative impact in the double-digit euro millions" from tariffs in the second quarter of the year. As a result, the company is now wary of its bullish 2025 outlook, with Gulden stating, "We feel the volatility and uncertainty in the world does not make this prudent."
Adidas's largest sourcing countries, Vietnam and Indonesia, will face tariffs of 20% and 19% respectively, further exacerbating the company's cost challenges. In response, Adidas plans to raise prices to offset the increased expenses, joining other major brands like Nike, Macy's, and Walmart that have announced similar measures.
Despite the headwinds, Adidas reported a 58% year-over-year increase in operating profit for the second quarter, with revenue jumping about 2% to nearly €6 billion. However, the company's stock price fell 7% on the day the news was announced.
