Adidas warned investors that it will likely push through price increases on its U.S. product lineup in the second half of this year, after new U.S. import duties driven by President Donald Trump’s trade policies are set to tack roughly €200 million ($231 million) onto its full‑year cost base. The sportswear giant—whose U.S. business accounts for about one‑fifth of group revenue—said the precise timing and extent of any price hikes will depend on final tariff rates and consumer response amid rising inflationary pressures.

Tariff Shocks Fuel Cost Pressures

In a conference call with analysts, Adidas Chief Executive Bjørn Gulden underscored that planned 20 percent duties on Vietnamese footwear and 19 percent on Indonesian goods—the company’s two largest sourcing origins—have driven effective tariff rates on key sneaker lines from 26 percent to 46 percent and from 24 percent to 43 percent, respectively. Those levies, coupled with existing U.S. footwear duties, mean every pair of Samba, Gazelle and Ultraboost shoes destined for American stores will now carry a significantly steeper import bill.

Adidas said these levies translated into a “double‑digit million euro” drag on second‑quarter operating profit. While full-year guidance remains unchanged, management noted that without offsetting measures—namely price adjustments—net margins could be eroded as the incremental €200 million cost flows through the P\&L in H2. Gulden cautioned that uncertainty around final duty levels “still hangs over consumer demand,” adding that any delay in implementing price changes could further compress profitability if costs rise before retailers and shoppers absorb the extra burden.

Inventory Build‑Up and Currency Headwinds Amplify Margin Squeeze

To mitigate the uncertainty, Adidas pre‑emptively front‑loaded shipments in anticipation of the duties, swelling its global inventory by 16 percent to €5.26 billion by the end of June. While higher stock levels provide a buffer against immediate shortages and allow more time to calibrate pricing, they also tie up working capital and risk markdowns if consumer demand softens. In parallel, a weaker U.S. dollar and Chinese yuan subtracted roughly €300 million from second‑quarter sales—compounding the tariff impact and limiting the company’s ability to smooth price increases across markets.

Regional performance data showed U.S. sales growth of low single digits in local currency, but euro‑denominated revenues were flat as currency conversion penalties offset volume gains. Gulden noted that even as Adidas invests in doubling its U.S. footprint, the combined headwinds of inflated import costs and adverse exchange rates mean that maintaining current pricing would be tantamount to accepting weakened margins. Internal forecasts project that, without tactical price hikes, second‑half operating margin could fall by up to 50 basis points versus the first half.

Strategic Pricing Response and Consumer Considerations

Faced with these pressures, Adidas plans a phased pricing strategy: keeping wholesale and retail prices on established “ever‑green” models stable as long as possible, while introducing adjusted price points on new‑launch products that lack existing price benchmarks. This tiered approach aims to minimize consumer sticker shock on core lines—Samba classics and seasonal colorways—by targeting premium segments—limited‑edition drops and performance‑oriented collections—for earlier increases.

Behind the scenes, Adidas is conducting consumer‑elasticity studies and A/B pricing trials across key U.S. markets to gauge tolerance levels. Executive teams are analyzing basket‑level data to identify which sub‑segments (e.g., basketball sneakers versus running shoes) can absorb a 5 percent to 10 percent premium without materially denting sales velocity. Simultaneously, the marketing department is crafting storytelling around “value preservation,” emphasizing product durability, sustainability credentials and brand heritage to justify higher retail tags.

Adidas is also exploring cost offsets via supply‑chain efficiencies and targeted product rationalization. Earlier this year, the company announced plans to streamline its accessory and apparel portfolios, discontinuing underperforming lines to redirect investments into high‑margin categories such as Originals sneakers and performance apparel. Wholesale price increases on accessories—bags, caps and socks—are reportedly on the table as part of a broader margin recovery plan.

Analysts say the success of the pricing strategy hinges on Adidas’s ability to maintain consumer loyalty in the face of elevated retail prices industry‑wide. Competitor Puma and New Balance have already indicated they will pass through a portion of the tariff hikes, while Nike has absorbed some costs to protect market share, tightening the competitive backdrop. Retail partners, including Foot Locker and Dick’s Sporting Goods, are negotiating margin‑sharing agreements to spread price increases across wholesale and retail channels, a development Adidas is watching closely.

As Adidas approaches its planned price adjustments—likely to roll out between September and December—it will need to balance shareholder expectations for margin expansion against risks of inventory buildup and trade‑down behavior. The upcoming holiday season represents both an opportunity and a test case: festive demand could sustain premium price tags on new releases, but any miscalibration could leave Adidas with excess stock and forced promotions early in 2026.

With the company scheduled to host an investor day in November, Gulden is expected to provide a detailed outlook on U.S. pricing plans, tariff scenarios and margin recovery trajectories. Until then, the market will remain focused on Adidas’s ability to translate higher costs into revenue without undermining its premium positioning in the world’s largest sportswear market.

(Adapted from Reuters.com)