Given uncertainty in the U.S. market, Adidas may have to try and make more of its money elsewhere, chief executive officer Bjørn Gulden said during an online press conference reporting first-quarter results Tuesday morning in Germany.
Despite market uncertainty and global tariff turmoil, Adidas reported organic growth of 12.7 percent in the first quarter to 6.15 billion euros. The sportswear giant’s operating profit also grew significantly, rising 81.7 percent to 610 million euros.
“It has been a very good quarter and I’m very proud of what the teams around the world achieved,” Gulden said. “As you know it’s not been an easy quarter when it comes to external factors.”
The company, which produces hardly any product at all inside the U.S., had already taken various measures to try to compensate for the impact of on-again, off-again tariffs by the Trump administration.
Over the past seven years or so, both Adidas and competitor Nike have been steadily moving production out of China and into countries like Vietnam. Adidas now makes around 40 percent of its footwear there. The U.S. government is leveling tariffs of up to 145 percent on Chinese-made goods but also recently targeted Vietnam with higher tariffs, before dropping them back to 10 percent.
In response, Gulden said Adidas had tried to clear as much product through U.S. customs as possible before tariffs were imposed and had rerouted products made in China to other markets or left them in the Chinese market itself.
As yet, Adidas hasn’t raised prices in the U.S. nor has it seen any shortages or any adverse reactions from American consumers, company executives noted.
In fact, any Adidas products that might be impacted by tariffs — even the reduced 10 percent tariffs currently on Vietnam — have yet to land in North America. “Nothing is visible yet,” Gulden explained.
Some products will land in the second quarter and might have a slight effect on Adidas’ margins, but it won’t be until the last half of the year that tariffs really hit, he said. At that stage, Adidas will be watching consumer reactions closely and respond accordingly.
“We’ve flagged the uncertainty going forward,” Gulden explained. “We have about 20 percent of our business in the U.S. — so important for us, is also that we focus on the other 80 percent which you can see we have momentum in. The whole organization is focusing on more of the other markets, making sure that we continue with our momentum and that we maybe get even more growth out of them than we currently have.”
In fact, it is even a somewhat “ironic” advantage that Adidas isn’t as exposed to the U.S. market as others, Gulden said, likely a veiled reference to Nike, which manufactures abroad but sells around 40 percent of its products at home.
In the first quarter, European revenues rose 14 percent. In Greater China and in Japan and South Korea — Adidas now tallies the two latter countries together — the brand saw growth of 12.7 percent and 12.8 percent, respectively. Emerging markets and Latin America rose 23.4 percent and 26.2 percent, respectively.
In North America, sales grew 2.8 percent. But Adidas executives noted their first-quarter tallies no longer included any of the previously very profitable Yeezy products, the result of a now-canceled collaboration with the controversial rapper formerly known as Kanye West. When Yeezy sales were excluded from that calculation, North American sales would actually have increased 13 percent between January and March.
In all other territories, Adidas’ sales growth was one to two percentage points higher in the first quarter, when Yeezy products were taken out of the comparatives.
In the first quarter last year, Yeezy goods brought in around 150 million euros and Adidas executives emphasized the group’s growth without Yeezy reflected the current strength of the brand.
A trend for so-called “terrace” shoes has helped Adidas climb out of the financial hole caused by cancelling the Yeezy line.
Some market analysts have pondered how long Adidas’ good fortune with the “terrace” trend can last.
A still from Adidas’ latest campaign for it’s “Originals” line.
“Many of you question if this is not dangerous…in the sense that things can slow down,” Gulden conceded. “But I can tell you that the heat in these different franchises is being kept — by updating them with different materials, doing limited editions, and then extending the franchises, depending on the heat in different markets. We are not afraid of this,” he declared.
The so-called “low-profile” trend is also benefiting Adidas, with one collaborator, Puerto Rican musician Bad Bunny, popularizing a kind of gender-bending, ballerina-meets-sneaker look, he said. “And if you want an insider tip, anything with animal print is flying off the shelves,” Gulden added, laughing.
Adidas is also placing bigger bets on “lifestyle” running shoes, including a 3D-printed sneaker to be released shortly and the Adizero Evo SL, an affordable version of a much pricier shoe designed for professional athletes.
The latter “was meant as a training, running shoe,” Gulden explained. “But because of the design, the weight, the comfort and yes, because of the look, it has become a major lifestyle shoe.”
Adidas reiterated its guidance for the full year, first issued earlier in March. However, because of “external volatility and macroeconomic risks,” the range of possible outcomes had to be widened, the company said in a statement.
Adidas now expects sales to grow at a high-single-digit level in 2025 and for its operating profit to fall somewhere between 1.7 billion and 1.8 billion euros.
