Adidas shares tumbled on Wednesday after the German sportswear giant reported second-quarter sales below expectations and warned that new US tariffs would significantly raise costs in the second half of the year.
Despite a solid rise in profit, the company opted to maintain its annual guidance, citing global volatility and uncertainty.
The stock fell as much as 8.9% in early European trading, extending its year-to-date decline to 24%.
At 10:46 am, the stock was down by 6.2% in Frankfurt.
The sharp drop came after Adidas said President Donald Trump’s renewed tariffs could increase the cost of its US products by up to 200 million euros ($231 million) over the remainder of the year.
“The year has started great for us, and normally we would now be very bullish in our outlook for the full year,” Chief Executive Bjorn Gulden said.
“We feel the volatility and uncertainty in the world do not make this prudent.”
Profit jumps, but sales miss market expectations
For the quarter ended June, Adidas posted revenue of 5.95 billion euros, a 2.2% increase compared to the same period last year.
However, this fell short of analysts’ expectations of 6.15 billion euros.
Operating profit rose nearly 58% to 546 million euros, ahead of the 520 million euros expected by analysts, according to LSEG data.
Net income climbed to 369 million euros from 190 million euros a year earlier.
The company’s gross margin also improved by 0.9 percentage points to 51.7%, driven by lower discounting and falling freight and production costs.
Despite the robust profit figures, analysts flagged disappointment over Adidas not upgrading its full-year forecast.
“This could cause some disappointment as the market expected an uplift of the group’s operating profit guidance,” said Volker Bosse, analyst at Baader Helvea.
Adidas maintained its 2025 outlook, projecting operating profit between 1.7 billion and 1.8 billion euros and targeting high single-digit growth in currency-neutral sales.
Tariffs and currency effects weigh on outlook, CEO says US price increases a possibility
The decision to keep guidance flat comes amid growing concerns over the impact of fresh US trade measures.
Earlier this month, the US imposed a 20% tariff on many goods from Vietnam and a 19% levy on products from Indonesia—Adidas’ two largest sourcing countries, which accounted for a combined 46% of its production in 2024.
These new tariffs have already impacted Adidas’ second-quarter results by what the company described as a “double-digit million euro” figure.
The full effect is expected to materialise in the coming months, further squeezing margins.
Gulden said there will be a pricing review with final duties, but price increases, if any, will only be implemented in the US.
Meanwhile, a stronger euro and weaker dollar also dented revenue, with currency fluctuations reducing sales by around 300 million euros in the June quarter.
Inventories rose 16% to 5.26 billion euros, partly due to the company frontloading shipments to the US to beat tariff deadlines.
Investors will eye H2 outlook and 2026 orderbook for reassurance: analysts
Investors reacted sharply to the mixed update.
“For investors to view this as a temporary setback, the company will need to deliver a reassuring message regarding the outlook for H2 and the early 2026 order book,” UBS analyst Robert Krankowski said in a note to clients.
Analysts at Jefferies added that the underlying turbulence in the wholesale orderbook would be closely watched, particularly in light of Adidas’ reluctance to revise its outlook despite strong Q2 earnings.
Market peers also felt the ripple effects. Shares in British retailer JD Sports, a key Adidas partner, declined 1.9% following the announcement.
JD’s own stock has dropped nearly 9% year-to-date, partly reflecting pressure across the sector.
While Adidas has shown resilience in cost management and operational efficiency, the months ahead may prove more challenging.
With tariffs increasing input costs and macroeconomic volatility clouding forecasts, investors will be looking for clarity in the company’s next update.
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