Adidas could suffer its first annual opening loss in over three decades, warned the footwear company. This is mostly due to the company having to write off the entire range of Yeezy-branded clothing and sneakers.
The German sportswear maker said that it would face an operating loss of 700 million euros (US $ 736 million) this year— its first in over 31 years — because of a potential 500 million euros (US $ 527 million) hit related to unsold Yeezy stock, and the cost of a strategic review.
Adidas shares fell 2.2 per cent Wednesday morning after its 2022 results and outlook for 2023 were published.
The company had to break off its lucrative partnership of nine years with Yeezy designer Ye, the rapper formerly known as Kanye West, in October due to objectionable views and statements from the controversial rapper. Adidas said last month that its annual revenue could plunge by 1.2 billion euros (US $1.27 billion) this year as a direct result of the split, which came after Ye made a series of antisemitic remarks.
Around 600 million euros were knocked off the company’s fourth-quarter revenue, Adidas said due to the split from Ye. Adidas could perform better this year if it ‘repurposes’ some of its Yeezy products, the company said without elaborating.
“We definitely did not perform as we should have performed,” said Chief Financial Officer Harm Ohlmeyer when presenting the company’s results Wednesday.
“2023 will be a year of transition to set the base to again be a growing and profitable company,” Chief Executive Officer Bjørn Gulden said in a statement last month.
“I am convinced that over time we will make Adidas shine again. But we need some time” he added further.
