Adidas Q4 profit takes beating on Ye breakup, china slump
Adidas’ breakup with the rapper formerly known as Kanye West and the inability to sell his popular Yeezy shoe line helped against profits late last year, leading to a net loss of $540 million.
The fourth-quarter loss, also attributed to higher delivery costs and declining revenues in China, contrasts with a profit of $225 million in the same period a year ago, the German footwear and sportswear maker said Wednesday.
More losses may lie ahead as the company forecasts a $527.5 million drop in sales this year if it decides not to reuse the remaining Yeezy products it has in stock. The company forecasts a 2023 operating loss of $740 million.
Adidas parted ways with West in October following the rapper’s anti-Semitic comments on social media and in interviews, and faced pressure along with other brands to end ties. The company is now struggling to find ways to replace its banner Yeezy line, which analysts say accounted for as much as 15% of its net income.
CEO Bjorn Gulden said in a statement that 2023 would be “a year of transition” and “we can then start building a profitable business again in 2024.”
Fourth quarter net sales increased just 1.3% to $5.49 billion from the year-ago quarter, held back by approximately $633 million in lost revenue from the decision to discontinue partnership with West , who legally changed his name to Ye.
The company also cited a sales decline in China of about 50% and higher costs for deliveries and shipping, which could not be offset by higher prices.
For the full year, the Herzogenaurach, Germany-based company said it had net profit of $673 million on sales that rose 6% to $23.7 billion.
The company also said yes replacing its top executives in sales and marketing. Roland Auschel, head of global sales, is leaving the company after 33 years and is succeeded by Arthur Hoeld, now head of the Europe, Middle East and Africa region.
Brian Grevy, head of global brands, will step down on March 31. CEO Gulden takes responsibility for its product and marketing activities.