- The German sportswear company posted a fourth-quarter operating loss of 724 million euros and a net loss from continuing operations of 482 million euros.
- Adidas ended its highly lucrative partnership with rapper and fashion designer Ye – formerly known as Yeezy’s face Kanye West – in October after he made a series of anti-Semitic comments.
“The numbers speak for themselves. Right now we’re not performing as well as we should,” Adidas CEO Bjørn Gulden said in a press release.
Jeremy Moller / Contributor / Getty Images
Adidas posted a big fourth-quarter loss on Wednesday and cut its dividend after the costly end of its partnership with Kanye West’s Yeezy brand in October.
The German sportswear company posted a fourth-quarter operating loss of 724 million euros ($763 million) and a net loss from continuing operations of 482 million euros. The company will recommend a dividend of 70 euro cents per share at its May 11 annual general meeting, down from 3.30 euros per share in 2021.
Currency-neutral revenue fell 1% in the fourth quarter as a result of the termination of the company’s Yeezy partnership and will decline at a high-single-digit rate throughout 2023, the company said.
Adidas has forecast a full-year operating loss of 700 million euros in 2023, marking its first annual loss in 31 years. The estimate includes a potential Yeezy inventory write-off of 500 million euros and “one-off costs” of 200 million euros.
Adidas ended its highly lucrative partnership with rapper and fashion designer Ye – formerly known as Yeezy’s face Kanye West – in October after he made a series of anti-Semitic comments. The company previously flagged a tough hit on earnings if it couldn’t replace its huge remaining stock of unsold Yeezy shoes.
The company said underlying operating profit would be “break-even”, reflecting a 1.2 billion euro loss on the potential sale of unsold Yeezy shares.
New Adidas CEO Bjørn Gulden, who took over from Kasper Rørsted earlier in the year, said in a statement on Wednesday that 2023 would be a “transition year” as the company cuts inventory and cuts discounts to return to profitability. In 2024.
“Adidas has all the ingredients to succeed, but must focus on our core: the product, the consumer, the retail partners and the athletes,” Gulden said.
“Motivated people and a strong Adidas culture are once again the most important factors in creating a unique Adidas business model. A business model created to focus on serving our consumers both wholesale and DTC, which balances a global direction with local needs. Agile, and of course, reliability and The brand always invests in sports and culture to generate heat.”
For the full year 2022, currency-neutral revenue rose 1% and grew in all markets except Greater China, with double-digit increases seen in North America and Latin America. Operating profit was 669 million euros, while net income from continuing operations was 254 million euros.
“Inventory discounts and one-off costs related to the termination of its Yeezy partnership in October cost Adidas dearly, resulting in an operating loss and a decline in sales in the fourth quarter. On top of that, sales in China fell sharply amid Beijing’s strict lockdown measures last year,” said Interactive Investor’s chief investment officer. Victoria Scholar noted.
“Plus adidas is dealing with increased supply chain costs post-pandemic and a macroeconomic backdrop that has weakened consumers and prompted heavy discounting to attract customers.”
Adidas shares fell 1.7% in morning trading in Europe, but are up more than 11% on the year.
