adidas AG (OTCQX:ADDYY) reported a better-than-expected first quarter with revenues rising by 13% to €6.153 billion.
The sportswear brand highlighted progress across all markets and channels.
Footwear sales grew by 17%, apparel was up 8%, and accessories improved 0%.
Operating profit rose by 82% to €610 million, on an operating margin of 9.9%, whilst net income from continuing operations more than doubled to €436 million year-over-year.
As a global brand (less exposed to the United States compared to rival Nike), the German group highlighted “strong” growth (so far) in Europe, Greater China, Japan/South Korea, Latin America, and emerging markets.
Moreover, CEO Bjørn Gulden told investors that Adidas “should” be upgrading forecasts and expectations given the strong performance, but it won’t due to the uncertainties over international trade and the impacts of Donald Trump’s tariff war.
“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,” Gulden said in the results statement.
He added: “Although we had already reduced the 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.”
Gulden highlighted the dilemma facing global brands, telling investors it is currently impossible to quantify the actual impact in costs and pricing decisions, or determine the extent of impact upon consumer demand.
“We will try to manoeuvre through this uncertainty in the most pragmatic, agile and flexible way,” he added.
“We have all parts of the organisation 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 and to the best possible price.”