Duties derailed Adidas' forecast revision. Shares plummet to 1.5-year low

Additional costs due to U.S. duties have forced the world's second-largest sporting goods retailer Adidas to leave its 2025 forecast unchanged. New trade barriers could add up to €200 million to costs in the second half of the year, the company said. Despite strong profit growth in the second quarter, it decided not to improve its targets, attributing this to high uncertainty in global markets. After the report was published, Adidas shares plummeted almost 11% to their lowest level since February 2024;

Presenting its second-quarter report, Adidas said additional costs related to US duties could reach €200 million in the rest of the year, reports The Financial Times. This prevented the company from raising its forecast for 2025. CEO Bjorn Gulden said that under normal circumstances the retailer would have improved guidance after a strong start to the year. However, "in the current volatile and uncertain global environment, this would be unwise" as the size of US duties is still not completely clear, the Adidas chief recalled.

Thus, the company still expects that its currency-neutral sales growth will be in the range of 7-9% (high-single-digit) for the year, and operating profit will be €1.7-1.8 billion. Analysts, whose opinion is quoted by the FT, had forecast a profit of €2.1 billion.

However, the sports giant indicated that the full-year forecast may be revised due to "heightened uncertainty related to US duties and macroeconomic risks".

Adidas shares fell nearly 11% in German trading on July 30, to their lowest since February 2024. The retailer's value has fallen by more than a quarter since the beginning of the year.  

The company did not rule out that it would have to raise prices in the US. According to Gulden, they will be reviewed once the final U.S. duty rate on global imports is known, but the increases are more likely to affect new products rather than existing product lines, refers CNBC. So far Adidas has not raised prices in response to the duties, but has instead reallocated its supply structure, the channel reports. 

The company also pointed to potential broader risks to consumer demand if trade restrictions trigger a spike in inflation in the US -its key market (which accounts for a fifth of sales). 

"The duties, and especially the uncertainty [about them], are making things very difficult right now. The key for Adidas is to get through this as neatly as possible without causing long-term damage to the business," CNBC quoted Gulden as saying.

In the second quarter, the company reported revenue growth of 2% to €5.95 billion, while analysts LSEG, whose estimates are quoted by CNBC, predicted €6.23 billion. The results were also negatively affected by the strengthening of the euro: currency fluctuations reduced revenue by about €300 million.

Operating profit for the quarter increased by 58% to €546 million, exceeding expectations (€518 million). Net income from continuing operations (an indicator that takes into account only the company's operating business lines) increased by 77% to €375 mln;

Since Gulden took the helm of Adidas in 2023, the company has revised its targets upward several times, following a strategy of staying ahead of market expectations, notes WSJ. That's why the retained outlook is taken particularly sharply.

In addition, Adidas' revenue fell short of expectations and investors fear sales growth is starting to lose momentum, notes Reuters. They question whether the brand can further narrow the gap with U.S. rival Nike after a period of booming success with retro sneakers Samba and Gazelle, which offset the lack of revenue from the closed Yeezy range, the FT writes.

"For investors to see this as a temporary disruption, the company needs to give an encouraging signal regarding its outlook for the second half of the year and its order book for early 2026," UBS analyst Robert Krankowski explained in a note to clients.

Adidas' statements come just days after its rival Puma warned its first annual loss in a long time, citing weaker-than-expected sales in key markets as well as pressure from duties.

For sporting goods retailers, the fallout from President Trump's imposition of higher rates on U.S. imports could be particularly sensitive, as a significant portion of their products are made in China. In recent years, companies have begun moving production to Vietnam. Earlier this month, the U.S. and Vietnam reached a trade deal that will impose a 20 percent duty on imports from that country - instead of the 46 percent announced in April.

This article was AI-translated and verified by a human editor