Kanye West’s influence could cost Adidas $82 million in 2023

Adidas to post a loss of 75 million euros ($82 million) in 2023 (representative)

frankfurt, Germany:

Adidas on Wednesday reported a loss in 2023 due to the impact of the end of its partnership with Kanye West, but the company insisted it was starting to turn around its fortunes.

The German sportswear giant terminated its contract with the American rapper, now officially known as Ye, in late 2022 after he sparked an outcry over a series of anti-Semitic posts on social media.

The collapse of the partnership between Adidas and West, which co-designed the popular Yeezy line of sneakers, has deprived the company of an important source of revenue and left it saddled with a large inventory of unsold footwear.

Adidas posted a loss of 75 million euros ($82 million) in 2023, its first loss in years, after posting a profit of 612 million euros the previous year.

But CEO Bjorn Gulden, who was brought in from rival sporting goods company Puma to lead the company shortly after the Western tie-up collapsed, struck an upbeat tone.

“It will take a long time to turn the business around…the results are certainly not good enough,” he told a news conference.

“But it lays the foundation for truly delivering on our commitments.”

Results in 2023 are not as bad as previously feared, and by “2025 we should already be a good company and by 2026 we should be a really healthy company,” he said.

‘Year of Transformation’

Revenue fell 5% to 21.4 billion euros, particularly hard hit in the United States due to the discontinuation of sales of Yeezy sneakers.

Adidas has been gradually selling Yeezy sneakers, with revenue from two sales in 2023 reaching 750 million euros. However, this is lower than the €1.2 billion in revenue they will generate in 2022.

The company expects to sell the final Yeezy shoes at cost this year, bringing in about 250 million euros in revenue.

While sales in North America fell sharply and are expected to continue falling this year, sales in China rebounded strongly, which is good news for an important market that has suffered due to strict coronavirus containment.

Gulden has been promoting classic Adidas sneakers such as the Samba, Gazelle and Campus, and Adidas says sales of those products are growing well.

Adidas expects business to pick up in 2024, with sales expected to grow in the “mid-single digit” range and operating profit to reach about 500 million euros, double the figure in 2023.

With Germany set to host the European Football Championship in June-July and Paris hosting the Olympics soon after, Adidas is poised to generate additional sales from jerseys and related merchandise.

Still, the company’s forecast was hundreds of millions of euros below analysts’ forecasts, with some disappointed that the company didn’t improve what they saw as a lackluster outlook.

Deutsche Bank said the results were no surprise and that 2024 would be “another transition year” for the company.

“All eyes are on future awards and the building blocks to achieve this,” it added.

Adidas shares were little changed in Frankfurt following the results.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)