Adidas losses mount after Yeezy drops partnership

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Adidas warned Wednesday it could post its first annual loss in more than three decades amid the ongoing fallout from its now-defunct collaboration with Kanye West, largely due to its $763 million fourth-quarter loss.

Chief executive Björn Gulden said 2023 would be a “transformational year”. The German sportswear company is seeking to offload inventory from Yeezy — the highly profitable fashion brand created by the rapper, who now goes by Ye — and return to its core business. The company could start building a profitable business again in 2024, he said.

“Adidas has all the ingredients to succeed. But the focus should be on the product, the consumer, the retail partners and the athletes,” Gulden said in a statement.

The company ended her relationship in late October following several controversies, starting with her appearance in a “White Lives Matter” T-shirt at her Paris Fashion Week show. Days later, he made antisemitic comments on Instagram and Twitter, then doubled down on that rhetoric in a podcast and an unaired segment of an interview with Fox News anchor Tucker Carlson.

Adidas owns $500 million worth of Kanye West sneakers and doesn’t have good options

Celebrities, political leaders and Jewish organizations denounced the artist and called out Adidas, which was slower in its response than Yev’s other business partners. Balenciaga and JPMorgan Chase, among others, cut ties with him a few weeks ago.

At that point it faced a dilemma: what to do with the roughly $500 million worth of Yeezy shoes. Adidas said in February it could lose 1.2 billion euros ($1.3 billion) in revenue this year. Professionals could sell Adidas rebranded shoes, liquidate them, donate them or destroy them – but each option came with its drawbacks.

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Gulden said Wednesday that Adidas has ruled out burning, giving away or rebranding the sneakers. Bloomberg News. But he said the company is willing to sell them and donate the profits to charities.

“There are many people from all over the world who are interested in this from different communities,” he said. “I’ve only been involved for seven weeks and I’m not qualified to make a decision based on the facts I have.”

But there seems to be demand for the product. The CEO of Impossible Kicks, a major online reseller, told CNN last week. 30 percent increase in Yeezy sales Since adidas and Ye parted ways last fall.

If the company decides to “irreversibly” sell any of its Yeezy inventory, it is expected to incur a loss of 700 million euros by 2023. But it faces other problems, analysts say, including declining demand in China and how the company will fill the revenue hole from the Yeezy brand.

Beyoncé’s Ivy Park Apparel Brand Partnership With Adidas Is Underperforming, Wall Street Journal reported. And, so far, Adidas has failed to find “the next big thing,” Tom Nikic, a Wedbush analyst, told The Washington Post in February following the announcement of its potential Yeezy losses.

Adidas “is in a competitive industry and they haven’t quite had their A-game for years,” he said. “So that makes it difficult.”

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