Adidas fesses up to lasting damage of Kanye West breakup
Nuremberg, Germany – Adidas, Europe's largest sporting goods manufacturer, admitted it will take at least a year for the company to fully recover from its very messy breakup with rapper and designer Kanye West.
Adidas lost its luster after ending what was a close and lucrative association with Ye following his string of public antisemitic outbursts that led the company, and many others, to cut all ties with him.
Figures released by the company on Wednesday confirmed expected tough losses from terminating the relationship.
For the year, profit from continuing operations slumped from just under $1.5 billion to around $267 million, as the crisis surrounding Ye compounded problems related to high inflation and Covid lockdowns in China.
Adidas reported a fourth-quarter net loss of more than $500 million, including one-off hits of around $52 million, mainly related to restructuring costs.
Adidas admits 2023 will be "transitional" year
In 2023, Adidas expects currency-neutral revenues to decline at a high single-digit rate, expecting to report an operating loss of $738 million, should the sale of Yeezy products be completely lost.
The figure takes into account about $528 million in costs from a potential Yeezy inventory write-off, and more than $211 million in one-off costs. The German-based company may be forced to burn the Yeezy-branded shoes, analysts say.
Adidas plans to cut its 2022 dividend to $0.74 per share from $3.48 a year ago.
New Adidas boss Björn Gulden, who switched from rival Puma at the start of the year, said in a statement on Wednesday that "2023 will be a transition year to build the base for 2024 and 2025."
"We need to reduce inventories and lower discounts. We can then start to build a profitable business again in 2024," he added.
Cover photo: Collage: SCOTT OLSON / GETTY IMAGES NORTH AMERICA / Getty Images via AFP & Jean Baptiste Lacroix / AFP