Adidas Warns: Maintained Tariffs Will Lead to Higher Product Prices
Adidas Delivers Strong Q1 Results, Focuses on Modernization and Local Execution
Adidas has reported a robust performance in the first quarter of the year, with revenue increasing by 13% to 6.2 billion euros. This growth was observed even after excluding sales from the Yeezy brand, which sold out its entire inventory in 2024.
The German sportswear giant's sales were led by a 13% growth in North America, excluding Yeezy inventory. However, the growth in North America was the least among Adidas' markets, with a 3% increase in sales when Yeezy sales are included.
Adidas' focus on modernization is evident in its approach to sales channels. The company does not have a global target for the split between Direct-to-Consumer (DTC) and wholesale channels. In the recent quarter, 35% of Adidas' sales came from DTC channels, while 65% were from wholesale.
The company is also prioritizing success in soccer, running, training, and basketball globally. To achieve this, Adidas is focusing on local execution, including creating locally relevant campaigns, investing in sports that are important in specific markets, and giving local teams more control over their businesses.
In a bid to lessen the emphasis on the mix of DTC versus wholesale, Adidas opened 70 net new stores in the quarter.
Adidas has noted "increased uncertainty" in its outlook due to tariffs. The company is already rerouting products out of China intended for the U.S. market, and 80% of Adidas' business is unaffected by tariffs. However, North America will be impacted by tariffs, and the region is expected to face challenges.
To address the impact of tariffs, Adidas' inventories are up 15% over last year, which is beneficial in handling tariffs, according to CFO Harm Ohlmeyer. The company is also considering price increases if the Trump administration's tariffs remain in place. CEO Bjørn Gulden stated that Adidas would not be the first to increase prices, but would follow the market leaders.
Adidas has established an American group, creative, and leadership in LA for its U.S. operations. The new American Adidas group responsible for basketball, operating independently from Germany, includes John Miller as president of Adidas North America. John Miller emphasized the commitment to shaping basketball and college athletics in the U.S. under this independent structure.
Adidas has confirmed its guidance for sales to increase at a high-single-digit rate and for operating profit to land between 1.7 billion and 1.8 billion euros. The company's Q1 results were even stronger when Yeezy sales are excluded, indicating a promising future for Adidas without the Yeezy brand.
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