Adidas losses rise after exiting Yeezy partnership


Adidas warned on Wednesday that it could suffer its first annual loss in more than three decades amid the ongoing fallout over its now-defunct collaboration with Kanye West, a rift that largely resulted in its fourth-quarter loss of $763 million. quarter.

Chief executive Bjørn Gulden says 2023 will be a “transition year” as the German sportswear giant looks to offload its inventory of Yeezy – the highly profitable fashion brand created with the rapper, now called Ye – and to reorient itself towards its core business. The company can then start building a profitable business again in 2024, he said.

“Adidas has all the ingredients to succeed. But we need to refocus on our core business: the product, the consumers, the business partners and the athletes,” Gulden said in a statement.

The company ended its relationship with the artist in late October following a series of controversies beginning with his appearance in a “White Lives Matter” t-shirt at its Paris Fashion Week show. Days later, he made anti-Semitic comments on Instagram and Twitter, then doubled down on that rhetoric in a podcast and an unaired portion of an interview with Fox News host Tucker Carlson.

Adidas has $500 million worth of Kanye West sneakers and no good options

Celebrities, political leaders and Jewish organizations have condemned the artist and called out Adidas, which has been slower in its response than Ye’s other business partners. Balenciaga and JPMorgan Chase, among others, had severed ties with him weeks earlier.

At that time, he was faced with a dilemma: what to do with about $500 million worth of Yeezy shoes. Adidas said in February it could lose 1.2 billion euros ($1.3 billion) in revenue this year if it couldn’t reuse the merchandise. Industry experts said Adidas could sell name shoes, liquidate them, give them away or destroy them, but each option had its downsides.

Gulden said Wednesday that Adidas has ruled out burning the sneakers, donating them or renaming them, according to Bloomberg News. But he said the company was willing to sell them and donate the proceeds to charity.

“There are so many people interested in it in different communities around the world,” he said. “I’ve only been involved in this for seven weeks and I don’t feel qualified to make a decision based on the facts I have.”

But there seems to be a demand for the product. The CEO of Impossible Kicks, a major online retailer, told CNN last week that he had seen a 30% increase in Yeezy sales since Adidas and Ye parted ways last fall.

The company faces a projected loss of 700 million euros in 2023 if it “irrevocably” decides not to sell any of its Yeezy inventory. But it faces other issues, analysts say, including falling demand in China and how the company will fill the revenue hole left by the Yeezy brand.

Beyoncé’s Ivy Park clothing brand partnership with Adidas underperformed, The Wall Street Journal reported. And, so far, Adidas has failed to find “the next big thing,” Wedbush analyst Tom Nikic told The Washington Post in February after the company announced its potential Yeezy losses. .

Adidas is “in a competitive industry and they haven’t exactly had their A-game for several years now,” he said. “So that makes it difficult.”

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