BERLIN (dpa-AFX) - Adidas is bracing for higher costs and consumer price increases in the U.S. market due to escalating tariffs on imports, Chief Executive Bjorn Gulden said Tuesday.
The German sportswear giant, which sources much of its production from countries like Vietnam and Indonesia, warned that it cannot absorb the impact of new U.S. import duties without passing some of the cost onto consumers.
'Since we currently cannot produce almost any of our products in the U.S., these higher tariffs will eventually cause higher costs for all our products for the U.S. market,' Gulden told analysts. He emphasized that the unpredictability of trade policy particularly President Trump's 10 percent base-line duty on all imports has made it impossible for the company to issue a full-year profit forecast.
While Adidas preemptively shipped additional inventory to the U.S. before the tariffs took effect and rerouted Chinese-made goods to other regions, the company expects longer-term pricing pressure. 'Cost increases due to higher tariffs will eventually cause price increases,' Gulden said, though he added it was too early to determine the full impact on consumer demand.
The U.S. remains a critical market, but sales there rose just 3 percent in the first quarter, weighed down by the phaseout of the Yeezy line. By contrast, revenue grew 14 percent in Europe and 13 percent in China, helping Adidas nearly double its quarterly profit to 610 million euros, its strongest first-quarter performance ever.
With U.S. tariffs on Vietnamese goods reaching as high as 46 percent, companies like Adidas lacking domestic manufacturing infrastructure are in a tough bind.
Gulden hinted that being less reliant on the U.S. may be a strategic advantage compared to American-heavy rivals like Nike.
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