Adidas beats Q1 expectations but remains cautious as tariffs loom

Adidas has delivered better-than-expected Q1 results but warned tariffs will eventually cause higher costs for all its products for the US market.

The group’s revenue was up 13% to €6.1bn (£5.2bn) and operating profit surged by 82% to €610m (£517.8m), reflecting an operating margin increase of 3.8 percentage points to a level of 9.9%

Sales across the brand also increased 17%, with double-digit growth across all markets and channels. 

Regionally, Latin America’s sales increased 26% to €698m (£592.5m), while Emerging Markets sales grew by 23% to €870m (£738.5m) during the first quarter. 

Additionally, sales rose by 14% in Europe to €1.98bn (£1.68bn), 13% in Greater China to €1.02bn (£870m), and 12.8% in Japan and South Korea to €374m (£317.5m).

Looking ahead, the group stated that external volatility and macroeconomic risks have increased significantly since Adidas first issued its full-year outlook at the beginning of March. 

While the company confirms its outlook, the range of possible outcomes has increased. 

It now includes both upside potential reflecting the stronger-than-expected first quarter results on the one hand and downside risk due to the increased uncertainty around the possible direct and indirect impacts from higher US tariffs on the other hand.

Adidas expects to gain further market share and grow the company’s currency-neutral sales at a high-single-digit rate in 2025. It also projects operating profit to increase to a level of between €1.7bn (£1.44bn) and € 1.8bn (£1.53bn) in 2025. 

Bjørn Gulden, Adidas CEO, said: “I am very proud of what our team achieved in Q1. Double-digit growth across all markets and channels in today’s volatile environment shows the strength of our brand and underlines the great job our people are doing. The operating profit of € 610m (£517.8m)and the 9.9% operating margin prove the great potential of our company. A great quarter.

“In a ‘normal world’ with this strong quarter, the strong order book and in general a very positive attitude towards Adidas, 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.” 

He added: “Although we had already reduced China exports to the US to a minimum, we are somewhat exposed to those currently very high tariffs. What is even worse for us is the general increase in US tariffs from all other countries of origin. Since we currently cannot produce almost any of our products in the US, these higher tariffs will eventually cause higher costs for all our products for the US market. Given the uncertainty around the negotiations between the US and the different exporting countries, we do not know what the final tariffs will be.

“Therefore, we cannot make any ‘final’ decisions on what to do. Cost increases due to higher tariffs will eventually cause price increases, not only in our sector, but it is currently impossible to quantify these or to conclude what impact this could have on the consumer demand for our products.”

He concluded: “We currently see a positive development in all other markets and will of course try to compensate for the uncertainty in the US by delivering even better results in the rest of the world. We therefore stick to our original outlook but admit that there are uncertainties that could put negative pressure on this later in the year.”