On April 3, 2025, RBC Capital Markets released a comprehensive analysis of Adidas, maintaining its "Outperform" rating on the stock despite recent economic challenges. Analyst Piral Dadhania highlighted that the new reciprocal US import tariffs are more stringent than initially anticipated, particularly impacting sportswear manufacturers with production facilities in Southeast Asia.
According to Dadhania's assessment, which was made public on Thursday, the heightened import duties pose greater risks for competitors like Puma and Nike, as they have a larger revenue share in the US market and lower gross margins compared to Adidas. This analysis comes at a time when the global economic landscape is shifting, and manufacturers are grappling with increased costs.
In the luxury goods sector, the situation appears dire for brands like Burberry, which Dadhania predicts will suffer the most from the new tariffs, followed closely by Swatch. Conversely, luxury giants such as LVMH and Moncler are expected to be less affected due to their production bases in the US and Europe. This geographical advantage allows them to mitigate some of the financial impacts stemming from the tariffs.
Dadhania noted that luxury goods manufacturers are likely to pass on some of the increased costs to consumers, which could affect sales dynamics in the coming months. Meanwhile, for sports goods producers, a mix of strategies is anticipated, including price hikes, renegotiations with suppliers, and a partial absorption of the additional costs.
As the market reacted to this analysis, Adidas shares saw a significant drop. At 10:48 a.m. during the XETRA trading session, the stock plummeted by 10.5 percent, trading at €197.75. This decline reflects broader concerns among investors regarding the impact of tariffs and market conditions on Adidas' profitability.
So far on April 3, 2025, a total of 817,881 Adidas shares have changed hands, indicating a heightened trading activity surrounding the stock. Year-to-date, Adidas shares have experienced a decline of 16.5 percent, signaling a challenging start to the year for the brand.
In light of these developments, investors are closely monitoring how Adidas will navigate the turbulent waters of increased costs and competitive pressures. The company's ability to adapt to these new economic realities will be crucial in maintaining its market position.
The analysis by RBC Capital Markets underscores the complexities facing the sportswear industry, particularly in the context of shifting trade policies and economic pressures. As Adidas continues to adapt to these changes, its strategies in pricing and supplier negotiations will be pivotal in determining its future performance.
In summary, while RBC Capital Markets has maintained an "Outperform" rating for Adidas, the company faces significant headwinds due to new tariffs and competitive challenges. The coming months will be critical as Adidas seeks to implement strategies to mitigate these impacts and sustain its market position.
