Adidas CEO Cites US Retailer Caution Over Tariffs Hurting Upfront Orders

Adidas CEO Bjorn Gulden has expressed concerns that U.S. retailers are becoming increasingly cautious, leading them to reduce upfront product orders. This hesitation is driven by uncertainty over the full impact of President Donald Trump's tariffs on American consumers. Gulden noted that this nervousness also results in retailers demanding more flexible discount rates.

This cautious approach has affected Adidas's performance, with its North America sales falling by 5% in the third quarter. The region, which is Adidas's second-largest market after Europe, was the company's worst-performing. Global revenues still grew by 3% to a record 6.63 billion euros.

Adidas anticipates that U.S. tariffs will reduce its operating profit by 120 million euros this year, with the most significant impact expected in the fourth quarter. The company is implementing strategies to mitigate this hit, including targeted price increases on more expensive items and changes to its supply chain, such as reducing sourcing from China. However, Gulden warned that the full impact would be higher next year.

The company is also navigating currency fluctuations, with a strong euro impacting sales negatively. Despite these challenges and recovering from the costly fallout of its Yeezy partnership, Adidas's growth is being supported by popular retro sneakers like the Samba and its expanding running segment.

Impact This news can have a moderate impact on the global sportswear market and investor sentiment regarding companies exposed to the U.S. consumer market and international trade policies. The caution from retailers and potential price hikes could affect consumer spending. Rating: 6/10

Definitions: Upfront orders: Purchasing goods well in advance of their intended sale or use to secure inventory and potentially better pricing. Tariffs: Taxes imposed by governments on imported goods, which increase their cost. Operating profit: Profit generated from a company's normal business operations before accounting for interest expenses and income taxes. Supply chain: The entire process and network involved in creating and delivering a product, from sourcing raw materials to final customer delivery. Currency impact: The effect that fluctuations in exchange rates between different currencies have on a company's financial results when reported in its home currency. Yeezy affair: Refers to the termination of Adidas's partnership with rapper Ye (formerly Kanye West) due to his antisemitic remarks, leading to financial losses and a need to sell off remaining inventory.