Adidas Losses Billions Of Dollars After Dropping Kanye West

Adidas has issued a warning following the termination of its contract with rapper and fashion designer Kanye West due to his anti-Semitic remarks in October 2022.

The sportswear giants claim that the decision will have a significant negative impact on their profits as they have been unable to sell all of their remaining inventory of Yeezy shoes.

According to a report in the Wall Street Journal, the German company disclosed 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.

According to Adidas, this will result in an operating loss of 500 million euros and overall revenue losses of 1.2 billion euros.

The business added that it was still determining whether it would be permitted to sell its remaining Yeezy stock by repurposing them under a different brand. If this were not possible, there would be a 700 million euro operating loss this year, a 500 million euro drop in operating profit, and a 200 million euro increase in one-time expenses.

Bjorn Gulden, the newly appointed Adidas CEO, who left local rival Puma to join the company, noted: “The numbers speak for themselves. We are currently not performing the way we should.”

Although 2023 will be a year of change for the company, he insisted that Adidas will eventually get back on course.

Adidas is confronting a difficult Chinese market in addition to the fallout from the split with the West, as a result of Beijing’s stringent zero COVID regulations.

It has also had trouble with its relationship with Beyonce’s poor sales. The sportswear company made the decision to close its stores in Russia and stop operating its online store in March 2022. It was one of many foreign businesses that left Russia in the wake of the invasion of Ukraine.

Adidas disclosed its 2022 early financial figures on Thursday as well. According to the report, operating profit was 669 million euros, a reduction of 2/3 from 2021, while revenue climbed by 6% to 22.5 billion euros. From 2021 to 2022, net income from continuing operations decreased from 1.49 billion to 254 million euros.