Adidas Reports Loss After Kanye West Fallout

Adidas reported a loss for the year 2023, attributing it to the fallout following the termination of its collaboration with Kanye West.

This collaboration, which ended in late 2022 due to controversies sparked by West’s social media posts, had been responsible for the successful Yeezy line of trainers. The termination left Adidas facing a significant decrease in revenue and an excess inventory of unsold footwear.

The company experienced a loss of 75 million euros ($82 million) in 2023, marking its first loss in many years after a profitable year in 2022.

Despite this setback, CEO Bjorn Gulden, who took over shortly after the West collaboration ended, expressed optimism about the company’s prospects, emphasizing that while the current results were disappointing, they laid the groundwork for future success.

Revenue Decline as Kanye West Yeezy Sales Discontinue

Revenue declined by five percent to 21.4 billion euros, with particularly notable decreases in the United States due to the discontinuation of Yeezy sales.

However, Adidas has been gradually selling off its remaining Yeezy inventory, with two sales in 2023 bringing in 750 million euros, although this fell short of the 1.2 billion euros generated in 2022.

Looking ahead, Adidas anticipates an improvement in sales for 2024, with a mid-single-digit growth rate expected.

Operating profit is forecast to reach around 500 million euros, double that of 2023.

Additionally, with upcoming major sporting events like the European football championships and the Olympics, Adidas is poised to benefit from increased sales of jerseys and related merchandise.

Despite the positive outlook, the company’s forecast fell short of analyst expectations by several hundred million euros, leading some to view 2024 as another transition year for Adidas.

However, there is consensus among analysts that the focus should be on building a strong foundation for future growth. Following the release of the results, Adidas shares remained relatively stable in Frankfurt.