Strong Adidas results tempered by potential tariff impact

Despite strong Q1 gains in sales, operating profit and order books, Adidas has avoided lifting its full-year outlook, because of the uncertainty that US tariffs have placed on its go-forward business in 2025.

“In a ‘normal world’ with this strong quarter, the strong order book, and in general a very positive attitude toward Adidas, we would have increased our outlook for the full year both for revenues and operating profit,” CEO Bjorn Gulden said. “The uncertainty regarding the US tariffs has currently put a stop to this.”

The group has maintained its FY outlook of currency-neutral high-single-digit sales growth and an operating profit range of €1.7-€1.8 billion. Still, it warned that external volatility and macroeconomic risks have risen significantly since early last month. The US is at the most risk, with higher tariffs on imported merchandise from sourcing countries in Asia expected to fuel price increases across the market that could impact consumer demand.

“We will try to improve through this uncertainty in the most pragmatic, agile and flexible way,” Gulden said. “We have all parts of the organization involved and will do everything we can to assure that our US retail partners, and our US consumers, will get the Adidas product they want at the best possible price.”

Q1 Highlights

Operating income rose by 82 percent to €610 million from €336 million in the period ended March 31 on 13 percent net sales expansion to €6,153 million from €5,458 million. Gross margin inched 90 basis points higher to 52.1 percent as the operating margin increased by 380 basis points year-over-year to 9.9 percent. Wholesale revenues grew by 18 percent to €3,999 million. DTC sales, meanwhile, increased by 6 percent to €2,163 million, with own-retail up 13 percent but e-commerce down by 3 percent. Inventories were up 15 percent year-over-year at €5,072 million, reflecting a healthy position to support ongoing double-digit topline growth for the Adidas brand.

Footwear was a key sales driver, stepping ahead by 17 percent on a currency-neutral basis to €3,760 million. Performance sales expanded by high-single-digits, led by strong double-digit growth in running. Lifestyle revenues, fueled by health demand for styles within the Terrace, Skate and Retro Running franchises, rose by double digits.

Apparel sales jumped by 8 percent to €1,968 million in Q1, while accessories/gear sales were up 10 percent on a currency-neutral basis at €424 million.

Regional results

On a currency-neutral basis, sales across all markets rose by double digits in Q1 except for North America. In the company’s home European market, operating profit increased by 47 percent to €431 million on 15 percent reported sales growth to €1,986 million. Gross margin expanded by 250 basis points to 50.7 percent, and the operating margin gained 470 basis points to 21.7 percent.

Elsewhere, the North American quarterly operating profit slipped by 1 percent to €82 million despite a 6 percent revenue gain to €1,184 million. The region’s gross margin tumbled by 120 basis points to 43.9 percent. In Greater China, the Q1 operating profit grew by 13 percent to €300 million. Sales rose by 15 percent to €1,029 million, and gross margin widened by 150 basis points to 54.9 percent. But the period’s operating margin contracted by 50 basis points to 29.1 percent. In Emerging Markets, the quarterly operating profit rose by 21 percent to €181 million on 22 percent sales growth to €870 million, but the operating margin slipped by 30 basis points to 20.8 percent year-over-year.