Adidas could lose $1.3 billion in revenue in 2023, pending Yeezy stock
Adidas Profit Falls 80% After the Split With Yeezy!
The German sportswear company scrapped its partnership with rapper and fashion designer Ye, formerly known as Kanye West, the face of Yeezy, in October after he made a series of antisemitic comments.
Tweet on Adidas and Yeezy issue
@adidas could lose $1.3 billion in revenue in 2023, if it is unable to sell its existing Yeezy stock, via @YahooFinance #adidas #ye #markets pic.twitter.com/513H4uUqD1
— The_Journalbiz (@the_journalbiz) March 9, 2023
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The company said late Thursday that it is assessing what to do with the Yeezy inventory, adding it has already accounted for the “significant adverse impact” of not selling the products.
Operating profit would drop by about 500 million euros if the company fails to shift the products, and Adidas expects sales to decline at a high single-digit rate in 2023. Adidas could opt to write off its remaining Yeezy products
three critical issues influenced the drop :
- China slump,
- unsold inventory and
- Kanye West deal or the Yeezy shoes
Adidas said that revenue would decline by a single-digit percentage amount in 2023.
Adidas is facing a slump in China and $6 billion of unsold inventory, adding to its challenges after chaotic 2022 in which it dumped its chief executive and terminated its partnership with rapper Kanye West.
In the fourth quarter, revenue growth almost ground to a halt and the company posted a €482 million loss.
Adidas also slashed its dividend almost 80%.
Shares in Adidas were down about 2.4% in Frankfurt afternoon trading, with the results largely confirming preliminary figures from the company’s profit warning in February.
Adidas said revenue would decline by a single-digit percentage amount in 2023 as it aims for a reset under CEO Bjørn Gulden, who took charge at the start of this year.
Adidas had originally forecast 20% revenue growth for the fourth quarter but reported only a 1% rise, because of the loss of the Yeezy partnership, a disappointing performance in China and a withdrawal from Russia.
Adidas AG’s new CEO Bjorn Gulden aims to make the company profitable by 2024 — but the question of what to do with $1.3 billion of unsold Yeezy stock remains
