Adidas has cautioned that terminating its association with artist and fashion designer Kanye West last November could have a significant impact on company profits.
The company could lose hundreds of millions of dollars this year if it does not sell its Yeezy sneakers, according to the new CEO.
The sportswear company severed relations with West, also known as Ye, following his anti-Semitic social media posts.
This is the organization’s fourth profit warning since July.
“The evidence speaks for itself. We are currently performing below expectations “Bjrn Gulden, chief executive officer of the company, stated in a statement.
If all remaining Yeezy stock is written off, Adidas would incur a €500 million ($536 million; £443 million) loss in profits.
In addition, the company anticipates a business restructuring to cost an additional €200 million.
The corporation cautioned that this might result in an operating loss of €700 million for the current fiscal year.
Adidas is anticipated to return to profitability in 2024, the report claimed.
Concurrently, the corporation disclosed that its operating profit for the previous year had decreased to €669 million, a decrease of two-thirds compared to 2021.
After the announcement, Adidas’s U.S.-traded shares dropped by about 9 percent.
After West’s anti-Semitic remarks sparked a backlash, the corporation announced in October that it was terminating its extremely profitable agreement with him.
While the decision to sever its association with Yeezy had a significant negative impact on Adidas in the past year, the company also faced other obstacles.
Mr. Gulden joined Adidas from rival Puma at the beginning of this year, when his predecessor was fired following a series of financial warnings.
The company stated in March that it would close its stores in Russia and halt its online store there, joining a slew of major names that left the nation following the invasion of Ukraine.
The firm’s operations in China were also affected by Beijing’s zero Covid efforts, which resulted in the lockdown of the country’s largest cities.
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