Global sportswear manufacturer Adidas has said ending its partnership with Kanye West will hit profits by €500mln in 2023 due to unsellable stock left with the business.
If Kanye West’s “Yeezy’ branded stock cannot be repurposed it would lower operating profits and revenue for 2023 by €500mln and €1.2bln respectively, said the German leisure group.
The Bavaria-based business ended its relationship with Kanye West and his Yeezy clothing brand after he tweeted a string of antisemitic statements.
The company also anticipates a one-off cost of €200mln this year as part of a strategic review aiming to boost profits in 2024.
These losses would mean adidas reporting an operating loss of €700mln in 2023.
Adidas also forecast a sales drop in ‘high single digits, significantly below analysts’ predictions of 4% sales growth this year.
“The numbers speak for themselves. We are currently not performing the way we should,” said adidas chief executive officer, Bjørn Gulden.
This is the fourth time the retailer has lowered profits since July.
“We need to put the pieces back together again, but I am convinced that over time we will make adidas shine again. But we need some time,” Gulden concluded.
Gulden replaced Kasper Rorsted at the beginning of the year after the series of profit warnings.
“On top of this, adidas has been facing headwinds from China’s lengthy lockdowns and its exit from Russia in the wake of the war in Ukraine,” said Victoria Scholar at Interactive Investor.
“Beyonce’s tie-up with adidas to sell her Ivy Park clothing brand has also disappointed in terms of sales,” Scholar added
Adidas shares were down 11% today at €139.30.