adidas AG (OTCQX:ADDYY) will continue selling its leftover Yeezy stock in 2024, despite cutting ties with Kanye West, the brand’s creator, in 2022.
During the fourth quarter, the group decided to not write off the additional €300 million Yeezy stock it had left over and instead will look to sell it for “at least at cost” in 2024.
The decision, along with stronger-than-expected trading in the fourth quarter, meant operating profit reached €268 million for the 2023 financial year, down from 2022’s €669 million, but up against market estimates of a loss of €100 million.
Adidas had two Yeezy ‘drops’ during the financial year to help counteract the €500 million drag created when the German retailer severed ties with West (now known as Ye) back in October 2022 over antisemitic remarks he had made.
Through these drops, around €750 million in sales were generated, however, the €300 million in profits did not carry through to the group’s underlying operating profit figure of €200 million.
Sales during the 2023 financial year dropped 5% to €21.4 billion, with currency impacts, such as the devaluation of the Argentine Peso, resulting in a €1 billion hit to revenues.
Looking forward, adidas expects sales to grow at a mid-single-digit rate, while a €500 million operating profit is targeted as it continues to suffer from currency headwinds.
Any Yeezy sales, due to being sold at cost, are not expected to impact the group’s bottom line.
Adidas boss Bjorn Gulden said: “We do of course know that our financial performance is not good. But we are on the way of making adidas a good company again. As we said from the beginning, we just need the time to solidly build it up again.
“This year is the next building block needed to bring adidas back to be a company with double-digit growth and 10% operating margin.”
Shares in adidas are down over 7% at €163 on Thursday.