CEO of Adidas Isn’t Much Worried about Potential US Border Tax

NEW YORK, NY - JULY 31: An Adidas store is viewed in Manhattan on July 31, 2014 in New York City. The German sporting goods manufacture surprised investors with a profit warning on Thursday that lowered its shares by as much as 16%. Blaming currency issues, lower consumer spending in Russia, poor golf-equipment sales and other issues, Adidas said second-quarter net profit fell 16% from the year-earlier. (Photo by Spencer Platt/Getty Images)

Kasper Rorsted, Adidas CEO, says that Adidas isn’t much worried or feeling pressurized due to the potential US border adjustable tax, which would put 20% tax on imported goods in the United States.

Many of the manufacturers of consumer goods like toys, footwear, and apparel have been a little vexed by the consideration of BAT by Trump administration that could impose taxes on import of foreign-made items, a move that could hurt the US retailers. Under Armour, Nike, and Adidas among other sports manufacturers manufacture maximum number of consumer goods abroad mainly in the Asian subcontinent, which would be subjected to tax. If BAT gets approved, consumers would also suffer from higher prices as apparel makers and retailers would certainly pass along taxes to the shoppers. The top grade organizations of the industry are trying to fight this tax.

But Kasper Rorsted, who became Adidas CEO in October after running Henkel AG, the beauty care maker says that this tax is just one of many challenges that the consumer product makers are going to face in these years. He started as CEO of Henkel in 2008 and after that he has had to confront a lot of macroeconomic challenges like the euro crisis, Brexit, global financial crises, currency fluctuations in China and Brazil recession. Now with Adidas, he faces a possible BAT in the US.

He said that about 80% of the products in the sporting goods industry are made in Asia and BAT would hit everyone evenly. It is a concern for the entire industry rather than just Adidas, according to Rorsted and he also said that next year a different big challenge would be facing the company and its competitors.

The joining of Rorsted as Adidas CEO was as the company enjoyed a strong resurgence with the sales of the company jumping 18% to 19.29 Billion Euros or $20.3 Billion in the most recent year. Long term targets of Adidas were also very ballsy with the currency neutral sales projected at a growth between 10% and 12% on an average till 2020. This was above the prior target of single digit growth high during that time period

Adidas enjoyed a rebound in the market as the focus became less on a design that is euro centric and a pivot towards marketing and product development in the local market. President Mark King of North America said that Adidas has done an excellent job of telling Adidas story of performance style and technology through the US consumer lens. The company has bested both competitors in the US market and Adidas is still penetrating this market.

Adidas wants to get more local by starting local market manufacturing. The company plans to open a production factory called Speedfactory focusing on running footwear and targeting 5000 shoe pair production in 2017.

Leave a Reply

Your email address will not be published. Required fields are marked *