Adidas Grapples with Tariff Impact and Falling Shares
Adidas shares fell 7.5% after second-quarter sales missed expectations, with U.S. tariffs increasing costs by 200 million euros. Despite a stronger-than-expected profit, uncertainty holds back guidance. A levy on Vietnamese and Indonesian exports, key sourcing countries, exacerbates challenges. Tariff strategies hike inventories, and currency swings impact sales.
Adidas shares experienced a significant drop of 7.5% in early Wednesday trading after the company reported second-quarter sales that failed to meet market expectations. The sportswear brand also warned of an additional 200 million euros in costs due to U.S. tariffs in the latter half of the year.
This development underscores the impact of the U.S.'s unpredictable trade policies under President Donald Trump. Despite posting a profit that beat forecasts, Adidas is refraining from updating its annual guidance due to persistent uncertainty around U.S. tariffs, CEO Bjorn Gulden stated.
The tariffs have prompted Adidas to adjust its strategies, including frontloading purchases from major sourcing countries like Vietnam and Indonesia. As a result, inventories rose by 16% to 5.26 billion euros. The company also faces challenges from currency fluctuations, impacting sales by 300 million euros despite a higher gross margin.
(With inputs from agencies.)
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