Adidas says tariffs will add US$231mil to second-half costs
Highlighting the impact of U.S. President Donald Trump's volatile trade policies, Adidas said uncertainty was holding it back from increasing its annual guidance despite reporting stronger than expected second-quarter profit.
"We still do not know what the final tariffs in the U.S. will be," CEO Bjorn Gulden said in a statement. Another unknown is the indirect impact on consumer demand if the tariffs cause "major inflation", he added.
Shares in Adidas were down 2.6% in premarket trade. The stock is already down 16% since the start of the year.
The U.S. earlier this month announced a 20% levy on many Vietnamese exports and a 19% tariff on goods from Indonesia. Vietnam and Indonesia, Adidas' two biggest sourcing countries, made up 27% and 19% of the company's products, respectively as of 2024.
Like many other sportswear companies including Puma, Adidas has frontloaded product purchases into the U.S. to try and beat tariffs, driving its inventories up 16% to 5.26 billion euros at the end of June.
Net sales, adjusted for currency swings, rose 2.2% to 5.95 billion euros ($6.9 billion) in the quarter, lower than analysts' average estimate of 6.2 billion euros, according to data compiled by LSEG.
But quarterly operating profit reached 546 million euros, ahead of analysts' expectations for 520 million euros, a sign that Adidas is selling more products at full price.
Adidas' gross margin increased by 0.9 percentage points to 51.7% in the quarter, as reduced discounting and lower product and freight costs mitigated the impacts from currencies and tariffs.
Adidas is also having to contend with a stronger euro and weaker dollar, which hit sales by around 300 million euros in the quarter through June. - Reuters
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Star
an hour ago
- The Star
Our commodities remain competitive even with tariffs, says Johari
JOHOR BARU: The United States' 19% tariff on Malaysian imports will not affect the competitiveness of the country's commodities in global markets, says Datuk Seri Johari Abdul Ghani (pic). The Plantation and Commodities Minister said this was because the tariff for Malaysia remains competitive compared to other Asean nations, including Indonesia, which also faces the same rate. 'The 19% tariff imposed by the United States on Malaysia is among the lowest in Asean countries, and even Indonesia, the world's largest palm oil producer, is subject to the same tariff rate. 'In the context of palm oil, Indonesia is the largest producer and we are number two. But Indonesia is also subject to 19% like Malaysia, so there is no problem,' he told reporters after the Pasir Gudang Umno division annual general meeting here. On Aug 1, US President Donald Trump announced the 19% tariff for Malaysian goods entering the United States, down from an earlier rate of 25%. The new tariff structure takes effect in seven days and applies to all goods with limited exceptions for shipments already in transit. Besides Indonesia and Malaysia, Thailand, the Philippines and Cambodia have also been slapped with a 19% tariff. On an unrelated matter, Johari, who is also Umno vice-president, said the party needs to adopt a more progressive and inclusive mindset to stay relevant, particularly in reaching out to younger Malaysians. He said youth engagement must be prioritised, since young voters are expected to make up 40% of the electorate across parliamentary constituencies in the 16th General Election (GE16). 'This is not a small number. Their thinking is different. Many are highly educated, with degrees, Master's and even PhDs. 'They evaluate candidates based on substance, not just party loyalty. 'To win the hearts of this group, we must think differently, act differently, and truly listen to what they want,' he said. He added that the party must be willing to embrace reform and create space for new ideas, including those brought forward by younger members.
The Star
2 hours ago
- The Star
Malaysian diplomacy earns respect
Meeting the people: Anwar and Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi greeting attendees of the National Felda Settlers' Day Celebration and Rural Entrepreneurs' Carnival at Mitec in Kuala Lumpur. — RAJA FAISAL HISHAN/The Star KUALA LUMPUR: Malaysia's success in uniting Asean and promoting peace in the region has earned it international respect, with the country now seen as a key diplomatic player on the world stage, says Datuk Seri Anwar Ibrahim. The Prime Minister said Malaysia's name is now held in high regard globally, especially due to its efforts in bringing Thailand and Cambodia to the negotiating table, leading to a ceasefire agreement. 'Malaysia's name is honoured around the world. People are now talking about Malaysia's success in uniting Asean and achieving peace and progress for all. 'Almost every day, we are still in contact. Just last night (Friday), I was speaking with several prime ministers, including Prime Minister Hun Manet of Cambodia. 'I asked about the situation, and he said, 'Thank you very much Prime Minister, no more fighting,' but he asked for our help,' he said in his speech at the National Felda Settlers' Day Celebration and Rural Entrepreneurs' Carnival here yesterday. He said the Thai and Cambodian defence ministers are expected to arrive in Kuala Lumpur tomorrow to hold detailed discussions on peace efforts between the two countries. Anwar also revealed that US President Donald Trump commended Malaysia's role in facilitating peace between the two Asean nations. 'One of the first things President Donald Trump mentioned was, 'Prime Minister Anwar, fantastic work'. 'That was because of our success in bringing Thailand and Cambodia together to resolve and achieve a ceasefire and peace – something that is hard to achieve elsewhere.' He added that earlier attempts by others had fallen short. He expressed gratitude to the institutions working behind the scenes for the ceasefire between Thailand and Cambodia. Anwar added that he was proud as a Malaysian to see the country trusted by international partners. On a separate matter, Anwar attributed Malaysia's success in securing a reduced 19% tariff rate from the United States to the strength and effectiveness of its leadership. He said the previous 25% tariff was a serious concern as it would have had significant repercussions for the Malaysian economy. 'We are a hub for semiconductors and electrical and electronics (E&E) in South-East Asia. 'Our exports to the United States alone make up 60% of total E&E exports. How much is that? Over RM200bil a year in exports to the United States from E&E and semiconductors alone.' He added that Malaysian semiconductor exports would continue to enjoy zero tariffs. 'Semiconductors – once again, praise be to God – are not included in this tariff. Zero. We can export.' He also reiterated Malaysia's firm stand on the rights of Palestinians and its consistent advocacy for justice and human rights on the global stage. 'Malaysia is among the most resolute countries in defending the territorial rights of Palestine and the struggle of its people,' he said, adding that Malaysia is only able to do this because of its internal strength. Meanwhile, Anwar, who is also Finance Minister, announced an allocation of RM100,000 for each village under the Federal Land Development Authority (Felda) to implement development projects of their choice.
New Straits Times
3 hours ago
- New Straits Times
MAG's Boeing buy a strategic, self-funded move
KUALA LUMPUR: Malaysia Aviation Group's (MAG) purchase of Boeing aircraft is not a waste of taxpayers' money as alleged by certain quarters but rather a strategic business decision that was planned in advance and will be fully financed using the company's funds, said Tengku Datuk Seri Zafrul Abdul Aziz. The Investment, Trade and Industry Minister said the purchase decision had been announced as early as March this year, prior to United States (US) President Donald Trump's announcement of any new import tariff on goods. "So what does this purchase have to do with tariff negotiations? "The US imposed the tariffs partly due to the trade deficit. This means we sold more goods to the US than we bought from the country, so the US sought to reduce this deficit by imposing high tariffs of 25 per cent," he said in a post on his official X social media account yesterday. Hence, Tengku Zafrul said, Malaysia took the opportunity by listing all big-ticket purchases planned by Malaysian companies from the US, including the Boeing aircraft order. "We are not making the purchase just to reduce tariffs," he stressed. According to him, this demonstrated to the US that Malaysia is also a major buyer of its products, thus finally convincing the US to lower import tariffs on Malaysian goods from 25 per cent to 19 per cent. "This smart strategy is the result of careful negotiations, ensuring that the interests of both companies and the country are protected," he added. In March this year, Prime Minister Datuk Seri Anwar Ibrahim announced that MAG had placed a firm order for 30 Boeing 737 aircraft, scheduled for delivery by 2030. - BERNAMA
