Adidas has warned that it could take a revenue hit of €1.2bn (£1bn) and slump to a loss this year if it decides not to sell its remaining stock of products made in collaboration with Kanye West, after it cut ties with the rapper over his antisemitic comments.
The German sportswear giant said its decision last year to end the partnership to produce the Yeezy range with West, now known as Ye, will hit operating profits by €500m in 2023.
Shares in Adidas plunged 10% in early trading on Friday after it issued the profit warning – its fourth since July – and said it was still deciding whether it should “repurpose” any of the Yeezy products for sale.
The company said that if it decided to scrap all the stock then it would take a further €500m hit to operating profits.
“The numbers speak for themselves. We are currently not performing the way we should,” said Bjørn Gulden, the chief executive of Adidas, who joined the company last month. “2023 will be a year of transition to set the base to again be a growing and profitable company.”
The sportswear company ended its relationship with West in October, after the artist was suspended from Instagram and Twitter over offensive posts. It said his actions were “unacceptable, hateful and dangerous, and they violated the company’s values of diversity and inclusion, mutual respect and fairness”.
Adidas expects one-off costs of €200m this year as part of a strategic review the company is conducting to “reignite profitable growth” from 2024.
“We need to put the pieces back together again but I am convinced that over time we will make Adidas shine again,” said Gulden, who joined from rival Puma. “But we need some time.”
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Adidas said its operating profit for 2022 fell to €669m, a two-thirds fall on the €2bn it made in 2021.
In March, the company said it would close its stores and suspend online operations in Russia. Adidas has also been hit by China’s strict Covid restrictions put in place to curb a new wave of the virus late last year.
