With Donald Trump passing the 100 day mark in his second presidential term, the effect of his defining tariff policy remains the biggest variable in almost all economic sectors, but especially within the footwear realm. With nearly every step of the production process looping in a new international hub, taxing that global supply chain would fundamentally change the landscape as we know it. Near silence from major brands on how they’d tackle the challenges continued as POTUS announced a 90 day pause, but adidas’ Q1 earnings call finally brought an official statement from the Three Stripes.
Long-time readers and market watchers will know that these quarterly check-ins have been rosy affairs for the Three Stripes as of late. Many of those checkpoints have seen the brand push up their yearly guidance, making this Q1 report one of the first where they declined to do so. While many of the growth indicators from the past remain, the elephant in the room is of course the issue of tarrifs. To quote CEO Bjørn Gulden”In a ‘normal world’ with this strong quarter […] we would have increased our outlook for the full year both for revenues and operating profit. The uncertainty regarding the US tariffs has currently put a stop to this.”
Tough a needle to thread as it may be, we’ll refrain from inserting political editorialization into this discussion. Safe to say, the messaging from the administration has been mercurial on this issue. As adidas points out, you can add the ongoing nature of negotiations between the US and individual trade partners to the litany of moving targets within this realm, prompting Golden to remark “it is currently impossible […] to conclude what impact this could have on the consumer demand for our products.”
Exact figures are thus hard to come by, but is hard-line on one thing: “these higher tariffs will eventually cause higher costs for all our products in the US market.” In addition to rising sticker prices stateside, it may also come with indirect effects on supply; “[adidas] will of course try to compensate for the uncertainty in the US by delivering even better results in the rest of the world.”
All of this to say, it’s a near guarantee that some of adidas’ staple models will become more expensive in the near future, with most footwear brands likely following suit. These companies simply can’t absorb the increased costs of doing business without passing those onto the consumer at some point, particularly tough news in this industry. This remains a developing story — we’ll keep you updated as more major players join adidas in making official statements.
Lead image via @realdonaldtrump.
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The post adidas Warns Of Sneaker Price Increases For The US Due To Donald Trump’s Tariffs
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