*Adidas could see a loss of nearly $750 million this year after cutting ties with Ye (formally known as Kanye West).
The German company cut ties with the rapper late last year over his antisemitic remarks. As NPR reports, Adidas stopped production of Yeezy products as well as payments to the hip-hop star back in October.
Several companies severed ties with Ye following backlash over his anti-Jewish supremacy rants, including Balenciaga, Gap, and Footlocker. As Insider reports, citing the Financial Times, Adidas initially planned to sell the Yeezy merchandise under its own brand.
Adidas has collaborated with Ye since 2013. Per Moguldom, Yeezy products “generated an estimated 4-to-8 percent of the company’s sales, according to investment bank Cowen,” the outlet writes, adding “Shares of Adidas sank by 11 percent the morning of Feb. 10 after the company warned that if it can’t unload its Yeezy shoes and clothes, sales revenues could decline at a high single-digit rate in 2023.”
READ MORE: Adidas Reportedly Stuck with $5 Million Worth of Yeezy Sneakers
After dissolving its deal with Ye, “This would lower revenues by around € 1.2 billion and operating profit by around € 500 million this year,” the company said in a profit warning issued on Thursday.
Per the company’s news release: “Should the company irrevocably decide not to repurpose any of the existing Yeezy product going forward, this would result in the write-off of the existing Yeezy inventory and would lower the company’s operating profit by an additional € 500 million this year. In addition, adidas expects one-off costs of up to € 200 million in 2023. These costs are part of a strategic review the company is currently conducting aimed at reigniting profitable growth as of 2024.”
“The numbers speak for themselves. We are currently not performing the way we should”, said CEO Bjørn Gulden.
“2023 will be a year of transition to set the base to again be a growing and profitable company. We will put full focus on the consumer, our athletes, our retail partners and our adidas employees,” Gulden added.
“Together we will work on creating brand heat, improve our product engine, better serve our distribution and assure that adidas is a great and fun place to work. adidas has all the ingredients to be successful: A great brand, great people, fantastic partners and a global infrastructure second to none. 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 continued.
We Publish News 24/7. Don’t Miss A Story. Click HERE to SUBSCRIBE to Our Newsletter Now!
