Adidas to Raise Prices, Shift Production from China

Due to rising material and labor costs, Adidas is expecting a major increase in the cost of sourcing products over the next five years. According to Fortune, the athletic wear giant hopes to make up for this by raising prices and moving production from China.

The company said that higher input costs and currency effects could lower its gross margin by 50 to 100 basis points next year, but it could keep its operating margin stable by cutting expenses as a percentage of sales. According to Fortune, John McNamara, Adidas' head of global sourcing, expected labor costs to rise 11 to 15 percent annually, while the price of materials, such as cotton and nylon, could increase 1 to 4 percent annually.