Adidas AG, the company that made the simple three-striped sneaker a worldwide sensation, reported lower-than-expected revenue growth in the three months ending June 30 on Wednesday, which caused a 10% drop in its stock price.
This is similar to the poor performance of Puma SE, another German sportswear manufacturer, which saw a 21% decline last week after warning of weak demand.
It also reflects the financial impact of US tariffs, which it predicts would reduce gross profit by roughly €80 million ($92 million) this year.
According to Bjorn Gulden, CEO of Adidas, the company is dealing with increased expenses due to import taxes, or tariffs, which might cost them as much as €200 million.
Nevertheless, he is maintaining the company's earnings projection for this year at €1.7 billion to €1.8 billion, up from €1.3 billion the previous year. This falls short of the €2 billion analysts had anticipated, though, and it is out of the ordinary for Gulden, who usually boosts rather than maintains earnings estimates.
Adidas has been able to sidestep some levies by selling the majority of its Chinese-made goods within China. However, it still has to pay more for goods produced in other crucial areas, such as Vietnam, which is particularly significant given that 30% of Adidas's US imports are from Vietnam and are now subject to the additional taxes.
Adidas may lose up to €200 million this year as a result of these additional taxes.
Despite these additional expenses, Bjorn Gulden, the CEO of the company, projects profits for this year to be between €1.7 and €1.8 billion, which is more than the €1.3 billion made last year but less than the €2 billion predicted by experts.
Since most Chinese-made items are sold within China, Adidas is able to avoid some tariff charges. However, because of these tariffs, goods exported from Vietnam to the US are becoming more expensive.
Inflation, regional issues, and waning interest in Adidas' flagship sneakers (Samba, Gazelle) are all contributing factors to the company's slower growth. Sneakerheads are now more interested in Nike, Asics, and Vans, which makes them wonder if Adidas can continue its recent success.
1. Adidas Sambas are slowing down, but not dead
CEO Bjorn Gulden admitted that Samba sales have slowed.
This slowdown is partly because Adidas couldn’t meet the massive demand a couple of years ago, which made them ultra-popular then.
Sambas are still gaining popularity in some markets and get sales boosts with new versions—like metallic or animal-print designs.
2. But the bigger picture is worrying
Adidas is offering more discounts in the US, which signals sales pressure.
Retail analyst Stacey Widlitz sees this as a sign of weakening demand.
3. Sneaker trends are shifting
For the past decade, sneaker sales were driven mainly by fashion trends (e.g., lifestyle sneakers like Samba).
Now, sports performance is becoming more important, helping brands like On Holding AG, which makes running shoes.
This trend change is hurting Puma, which is still struggling to regain its momentum.
4. Nike is leaning back into performance
Nike CEO Elliott Hill is focusing on sport-driven sneakers—shoes that help athletes run faster or jump higher.
Nike still has unsold fashion sneakers, but their focus on performance shoes is showing results.
Example: the new Vomero running shoe earned $100 million in sales since February, showing strong demand for performance footwear.