Herzogenaurach, Feb. 10, (dpa/GNA) - German sports goods producer Adidas could face a loss this year following its decision to split with controversial rapper Kanye West.
If Adidas writes off the products created with West, who legally changed his name to Ye in 2021, and halts the sale of his Yeezy-branded goods, the company’s operating result could fall to minus €700 million ($750 million), the company said on Thursday.
Adidas halted its collaboration with the rapper and designer West following his repeated anti-Semitic comments.
His Yeezy line contributed €1.2 billion to sales and €500 million to operating profit. Without this area of business, the group expects an operating profit of around zero.
If it halts the sale of Yeezy products, a write-down would reduce the result by a further €500 million, plus there would be a one-time cost of up to €200 million.
“The numbers speak for themselves. We are currently not performing as well as we should be,” Adidas chief executive Bjørn Gulden said, noting 2023 will be a transition year to become a growing and profitable company again.
Adidas wants to focus on consumers, athletes, retail partners and employees, he said. The brand should be strengthened and product development and distribution improved, he said. “We have to put the pieces back together, but I am convinced that we will make Adidas shine again. But we will need some time to do that,” Gulden said.
He joined Adidas at the beginning of the year from Puma, replacing the Danish executive Kasper Rorsted at the helm of Adidas.
Rorsted was blamed for focusing on the once profitable Chinese market and other strategic missteps, requiring him to revise the forecast downwards several times last year.
According to preliminary figures, Adidas sales increased by 1% to €22.5 billion last year after adjusting for currency effects.
Operating profit was €669 million, down from nearly €2 billion a year earlier.
Adidas’ profit from continuing operations fell from just under €1.5 billion to €254 million.
GNA