- The U.S.-China trade war has “little impact” on import duties, Adidas’ CEO says.
- The “much more serious” concern is if the American consumer has less money to spend, Kasper Rorsted says.
- Rorsted’s comments are similar to Nike’s, which reported a surge in Chinese sales in its last fiscal quarter.
Adidas CEO Kasper Rorsted told CNBC on Wednesday the retailer is concerned with how the U.S.-China trade war will affect the U.S. consumer.
“The much more serious [concern] is if the American consumer has less money to spend,” he said.
If the average American customer has less money to spend, “he or she will spend less money on all products, including ours,” Rorsted added. “That’s the worrying one.”
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Rorsted’s comments come about a week after a report showed that U.S. consumer confidence in September fell more than expected, as the tit-for-tat trade war between Washington and Beijing weighs on sentiment.
He also said he was concerned about the devaluation of Chinese currency, since 25% of Adidas’ business is based in China.
Beijing in August set its official reference rate for the yuan at its weakest rate since April 2008, prompting the U.S. Treasury to label China a currency manipulator.
“That’s what we’re seeing,” Rorsted said on “Squawk Box,” in terms of potential impact. “We’re not seeing a slowdown in the manufacturing of our products.”
Despite the slowdown in global economic expansion, Rorsted pointed out that the company “saw very strong second-quarter growth in China.”
The German sportswear company reported disappointing results in August, though it said it expects a recovery. Rorsted said in August he saw “very little impact for the consumer” from the trade dispute and was not too concerned about how the additional tariffs will impact the company.
Adidas is in its quiet period before it reports fiscal third-quarter numbers, meaning Rorsted on Wednesday could only comment on the company’s second-quarter numbers. The retailer reports earnings Nov. 6.
Last week, Nike, a key competitor, reported that China sales grew 27% in its past quarter.
Nike makes items in China and imports goods into the country, putting the company in a vulnerable place in the trade war.
However, in an earnings call, Nike CFO Andrew Campion said the “impact of tariffs will be most pronounced” in the current quarter, but he expects “continued momentum going forward.”
Date: October 03, 2019