Adidas AG (OTCQX:ADDYY) shares fell sharply after the sportswear group reported its first annual loss since 1992.
The German giant posted a full-year net loss of €58 million as revenues declined 5% to €21.4 billion, though were flat on a currency-neutral basis.
Loss of sales from the cancelled Yeezy partnership with Kanye West hit revenues.
In the final quarter of 2023, footwear sales grew by 8%, while apparel sales fell by 13%, leaving currency-neutral sales down 2%.
However, Adidas expects an improvement in the business this year with double-digit growth by the second half.
The dividend of 0.70 euros per share was also maintained.
Chief executive Bjørn Gulden, who took over early last year, said it was a transition year and that the first quarter of 2024 would be positive.
"Although by far not good enough, 2023 ended better than what I had expected at the beginning of the year," he said.
"Despite losing a lot of Yeezy revenue and a very conservative sell-in strategy, we managed to have flat revenues."
The shares fell 2% to €186, though are still up since the start of the year.
What analysts said
UBS analysts said that despite fourth-quarter numbers having been pre-released, "we believe the incremental details, which point to rapidly accelerating brand momentum, should be taken well by the market confirming the conservative outlook for [the full year]".
They added: "Although some may be disappointed with no outlook upgrade despite the recent launch of Yeezy drops, we believe it is likely to be reflected in outlook once the drops complete."
Analyst Victoria Scholar at Interactive Investor said: "Adidas has struggled with the fallout from the end of its tie-up with Kanye West and the suspension of their popular Yeezy trainers.
"While footwear sales are storming ahead thanks to strong demand for Sambas and Gazelles, Adidas apparel has fallen out of fashion, struggling with weak demand.
"The rise in popularity of athleisure clothing with brands like Lululemon and Alo has come at the expense of Adidas’ clothing lines which are in the doldrums."
But Scholar said Gulden had enjoyed success with his decision to ramp up production of Samba and Gazelle trainers, helping the stock perform well last year, up over 20% to outperform Nike and Puma, with Gulden also making amends and building ties with independent retailers to help the brand.