Second-quarter sales of German sportswear maker Adidas missed expectations, prompting the slump in shares of 7.5% in early trade on Wednesday, with the company also warning that higher U.S. tariffs would add around 200 million euros ($231 million) to its costs in the second half.
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 a 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.
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.
The result will fuel fears that, after a run of very strong sales growth fueled by its trending three-striped multicolored Samba and Gazelle shoes, Adidas is losing momentum.
"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.
The U.S. earlier this month announced a 20% levy on many Vietnamese exports and a 19% tariff on goods from Indonesia. Adidas' two biggest sourcing countries, Vietnam and Indonesia, produced 27% and 19% of Adidas' products as of 2024.
Like many other sportswear companies, including Puma, Adidas has frontloaded product purchases into the U.S. to try to beat tariffs, driving its inventories up 16% to 5.26 billion euros at the end of June.
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.
Adidas' quarterly operating profit reached 546 million euros, ahead of analysts' expectations for 520 million.
Its 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.
