Following the termination of Adidas’ contract with rapper and fashion designer Kanye West due to anti-Semitic remarks made by him in October 2022, the sportswear giants have warned that the move will have a significant impact on its profit as the company has struggled to sell the remaining stock of Yeezy shoes, glamsquad reports
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According to a Wall Street Journal report, the German firm revealed on Thursday, 9 February, that the significant adverse impact of not selling the existing stock? from the formerly lucrative Yeezy partnership will cause sales to decline at a high single-digit rate in currency-neutral terms.
Adidas predicted a loss of 500 million euros in operating profit and 1.2 billion euros in total revenues as a result of this.
Furthermore, the company stated that it is still evaluating whether it will be granted permission to resell its remaining Yeezy stock under a different brand. Failure to do so would result in a 700 million euro operating loss this year, with a 500 million euro decrease in operating profit and a 200 million euro increase in one-time costs.
Bjorn Gulden, the new Adidas CEO who joined the company after leaving its local rival Puma, stated;
The figures speak for themselves. We are not currently performing as well as we should. He did, however, claim that Adidas would eventually get back on track, despite the fact that 2023 would be a year of transition for the company.
Apart from the fallout from the split with West, Adidas is also contending with a difficult Chinese market as a result of Beijing’s strict zero COVID measures.
It has also struggled with the low sales of its collaboration with Beyonce. In March 2022, the sportswear brand, which was one of many international companies to leave Russia in the aftermath of Ukraine’s invasion, announced the closure of its stores and the suspension of operations for its online store.
Adidas also released preliminary financial results for 2022 on Thursday. According to the report, operating profit was 669 million euros, a two-thirds decrease from 2021, while revenue increased by 6% to 22.5 billion euros. Net income from continuing operations fell from 1.49 billion euros in 2021 to 254 million euros in 2022. Adidas’ official 2022 results are expected to be released next month.