Photo credit: CNBC
The increase in trade tensions between the U.S. and China has been a topic of concern for many retailers and trade associations alike, but Adidas CEO Kasper Rorsted revealed in an interview with CNBC’s Sara Eisen on “Squawk Alley” that he is unfazed by the recent chatter. China is one of the largest expanding markets for Adidas: the country has already seen 25% sales growth in the first six months of 2018, after growth of 30% throughout 2017.
“Most of the manufacturing we have in China is for China,” said Rorsted. “Even if tariffs were to come, impacting the sporting goods industry, it wouldn’t impact Adidas…But there’s no doubt there are certain companies that have a very large manufacturing volume coming out of China [into the U.S.] and they will be impacted.”
Rorsted highlighted three key markets that will continue to drive growth for the athleticwear retailer: the U.S., China and global online. While China’s 25% growth rate is certainly impressive, the U.S. isn’t far behind at 20%,andtotal online growth across all markets is 30%.
While Rorsted is confident in the future of his U.S. and China businesses, he isn’t happy about the state of affairs in his company’s homeland — Europe. Adidas saw sales growth of 5% across Europe in Q1, but Rorsted believes that this increase represents an inflection point (European sales growth was flat in Q2). He expects sales to remain stagnant for the remainder of the year due to “a somewhat subdued consumer in the European marketplace.”
Rorsted points to Brexit as the main culprit, noting that Adidas has seen a slowdown in its UK business over the past two years since the Brexit vote.
“I think that Brexit is probably the most unwise economic position Europe has taken in the last 20 years, along with the UK,” Rorsted said. “There’s no doubt that the consumer and the economy will be impacted in the UK, in Europe for all businesses, including ours. Of course, we are setting up separate warehousing, doing more to hedge our bets.”
New Yeezy Shoe Line Will Still Be Limited
Beyond global concerns into 2019, the Yeezy footwear line from Kanye West has continued to drive massive hype for the Adidas brand. The footwear retailer recently released its Adidas Yeezy Boost 350 V2 sneakers in triple white, making the normally limited shoe selection more available to the public.
But in responding to Eisen’s question about whether Yeezys would be more democratic and available to everyone, Rorsted asserted, “No, not at all.”
“We’ll still be very scarce on certain models,” Rorsted said. “But on some of the older models, we will bring more volume into it. But if you’re looking for the innovation we are bringing in, we’re not going to bring that out in volume. So it’s still going to be hard to get a very new Yeezy shoe from Adidas.”