Adidas, the German sportswear company, has reported a net loss of €30 million ($33 million) for the first quarter of 2023, compared to a profit of €490 million during the same period last year. The announcement comes amid a dispute with the rapper Kanye West, who previously collaborated with Adidas on the popular Yeezy sneaker line. Adidas split from West in response to his antisemitic outbursts and offensive comments on social media and in interviews. This move led to a loss of €600 million in sales in the last quarter of 2022, contributing to a net loss of €513 million for that year.
The Yeezy shoes, which are estimated to be worth €1.2 billion, are still lying unsold, and Adidas CEO Bjorn Gulden said on Friday that the company was “getting closer and closer to making a decision” about what to do with them. However, he declined to reveal whether they might be destroyed, sold, or donated to people in need. Gulden noted that selling the shoes would require paying royalties to West, removing the brand identification would be dishonest, and donating them to people in need could lead to resale due to their high market value.
The collapse of the Yeezy line, which had been highly successful, accounted for a loss of sales of around €400 million. Adidas announced in February that it could suffer an operating loss of up to €700 million this year if it decided to write off the value of its existing Yeezy inventory. Gulden became CEO in January after the split with West and acknowledged that 2023 would be a “transition year” to build a strong foundation for better performance in 2024 and beyond.
Despite the loss, Adidas reported net sales of €5.28 billion, which was almost flat, defying market expectations for a fall. The company’s share price rose 7.5% on the Frankfurt Stock Exchange in the afternoon, with poor performance seemingly already factored into market expectations prior to the announcement. Gulden noted positive developments in some areas, such as increased popularity for its Samba, Gazelle, and Campus trainers, and strong sales growth in Latin America, which offset a 9% drop in sales in Greater China.
Last modified: May 6, 2023
