Adidas headquarters raided in years-long tax investigation

German authorities raided Adidas AG headquarters on Tuesday as part of a years-long tax investigation.

The probe is looking at a five-year period starting in October 2019 and pertains to customs and tax regulations for products imported into Germany, an Adidas representative said in a statement. The stock fell as much as 2.1 per cent in early Frankfurt trading.

The sportswear company’s headquarters in Herzogenaurach and other offices were searched. Adidas said it has been in contact with customs authorities for several years about the matter and is providing them with documents and information.

The situation threatens to become another blow for Adidas, which has faced repeated crises in recent years, including consumer boycotts and a significant hit to sales after severing ties with the rapper Ye and the Yeezy franchise.

Adidas has performed well under Chief Executive Officer Bjorn Gulden, raising its annual profit target in October for the third straight quarter amid a boom for retro sneakers like the Samba.

“The company does not expect any significant financial impact in connection with the investigation,” Adidas said.

The tax issues could lead to “minor one-off burdens” in the current fiscal year but shouldn’t change the company’s underlying potential, Volker Bosse, an analyst at Baader Bank, said in an email. Bosse confirmed his buy rating and target price for Adidas’s shares.

CEO Gulden has slimmed the company’s management ranks, taking on the job of overseeing the brand and giving some of the responsibility for managing global operations to Harm Ohlmeyer, his chief financial officer. Ohlmeyer is a 26-year Adidas veteran who’s been CFO since 2017, the entire time of the investigation.

Adidas is working with customs authorities to “clarify issues arising from different interpretations of German and European law,” it said.

The raid was first reported by Germany’s Manager Magazine.