Adidas earnings take beating on breakup with Ye, China slump
FRANKFURT, Germany (AP) – Adidas’ breakup with the rapper formerly known as Kanye West and its inability to sell his popular Yeezy line of shoes helped it outperform earnings at the end of last year, bringing in 513 million euros (net loss of 540 million).
The German shoe and sportswear maker said on Wednesday that the loss in the fourth quarter, also attributed to higher supply costs in China and slumping revenue, contrasted with a profit of 213 million euros in the same period a year earlier.
There could be further losses as the company forecasts a 500-million-euro drop in earnings this year if it decides not to restock Yeezy products remaining in stock. The company is forecasting an operating loss of 700 million euros in 2023.
Adidas parted ways with Ye in October after the rapper made anti-social remarks on social media and in interviews, facing pressure to end ties with other brands. The company is now grappling with finding ways to replace its banner Yeezy line, which accounts for 15% of its net income.
CEO Bjorn Gulden said in a statement that 2023 would be “a transition year” and that “we can start building a profitable business again in 2024.”
Net sales in the fourth quarter were up only 1.3% from the same quarter a year earlier at 5.21 billion euros, with the decision to halt the partnership with Yeh resulting in a loss of nearly 600 million euros in revenue.
The company cited a nearly 50% drop in revenue in China and higher costs for supplies and shipping, which could not be offset by higher prices.
For the full year, the Germany-based company Herzogenaurach said it made a net profit of 638 million euros on sales, up 6% to 22.5 billion euros.
The company also said it would be replacing its top sales and marketing executives. Global sales head Roland Oeschel will leave the company after 33 years and will be replaced by Arthur Hold, who now heads the Europe, Middle East and Africa region.
Brian Grevy, head of global brands, will step down on March 31. CEO Gulden will be responsible for their product and marketing activities.
