Adidas sales growth slows in North America as tariffs bite

Adidas reported its weakest third-quarter sales growth in North America, with its core brand up 8% ex-currency, significantly trailing other regions, and overall regional revenue down 5% including the discontinued Yeezy line. Despite this, the company recently raised its annual profit outlook, citing successful mitigation of higher U.S. tariffs through price increases and supply chain adjustments. CEO Bjorn Gulden noted a volatile environment due to tariffs and consumer uncertainty, with a strategic focus on future growth leading into major sporting events in 2026.

Analysis

Adidas reported its North American region as the weakest performer in Q3, with its core brand revenue growing only 8% year-over-year ex-currency, significantly trailing other regions' 10-21% growth. Including the discontinued Yeezy line, North American revenues declined 5% compared to the previous year, highlighting the impact of its absence in a key market. This regional underperformance contrasts with stronger results elsewhere.

Despite regional disparities, Adidas recently raised its annual profit outlook, indicating successful mitigation of increased costs from higher U.S. tariffs. This was achieved through strategic price increases, such as the Samba sneakers now starting at $100, and adjustments to its global supply chains to manage sourcing costs. This demonstrates effective operational management in a challenging environment.

CEO Bjorn Gulden acknowledged a volatile operating environment, citing U.S. tariff increases and broad uncertainty among retailers and consumers. The company is strategically focusing on transitioning effectively into 2026, aligning its efforts with upcoming major sporting events like the Winter Olympics and FIFA World Cup to drive future growth and brand momentum.

Key Decisions for Investors

• Investors should closely monitor Adidas's North American sales trends, particularly the core brand's growth trajectory and the long-term impact of the Yeezy discontinuation on market share.
• Evaluate the sustainability of Adidas's pricing power and its ability to continue offsetting tariff-related costs without significantly impacting demand in key markets.
• Track the execution of Adidas's long-term strategy leading into 2026 and how effectively it capitalizes on major sporting events to reignite brand momentum and drive revenue growth.