Adidas is anticipating a significant financial loss in 2023, which would be the largest the company has experienced in 30 years, after parting ways with American rapper Kanye West.
The sportswear giant recently reported a loss of $763 million in operating expenses for the fourth quarter. For the current year, Adidas is forecasting a full-year operating loss of $738 million or €700 million, marking the company’s first annual loss in 31 years.
Adidas has stated that they anticipate their underlying operating profits to reach a break-even level, which reflects an estimated loss in sales of approximately €1.2 billion. Additionally, they expect a negative impact on operating profits of around €500 million due to the potential non-sale of Yeezy stock.
Adidas said: “Underlying operating profits are expected to be around break-even level reflecting sales loss of around € 1.2 billion and corresponding negative operating profit impact of around € 500 million from potentially not selling Yeezy stock.
“Reported operating loss to be € 700 million including additional negative impact of € 500 million from potential Yeezy inventory write-off and up to € 200 million one-off costs.”
After cutting ties with the artist-turned-mogul’s Yeezy brand last year, Adidas has struggled to offload $500 million of inventory and faces $1.3 billion in lost revenue.
The company cut ties with Ye in October 2022 following a series of antisemitic comments he made on social media and in interviews which also prompted Twitter and Instagram to restrict his accounts on their platforms.
The new Chief Executive for Adidas, Bjorn Gulden, revealed the company was still deciding what to do with its stock of unsold Yeezy footwear.
He said, “Burning the shoes poses a sustainability issue while giving them away to charity is complicated due to their resale value, which has surged since the split.”
A pair of Yeezy 350 “Zebra” shoes is now selling for between $340 and $360, compared to around $260 four months ago, according to John Mocadlo, CEO of U.S. sneaker reseller Impossible Kicks.
Gulden said ending Yeezy, a decision that predated his taking the helm was the right thing to do but added that it was “very sad” and that it would take time for Adidas to build a new brand that is as influential.
“Plugging the gap left by Yeezy will not be easy”, Gulden said.
Also Read: Melle Mel Responds To Being Called Racist After Eminem Slander
Read Latest Entertainment News Here
Do you enjoy reading from Townflex? Do You Want Notifications From Us On Our Latest Post? If so, click on the Red bell icon below to subscribe to our feed, which will appear in your smartphone’s notification after we publish a new article. You may also follow us on Twitter at @Townflexgh, Facebook at Townflex, Telegram at @Townflex, Townflex on Pinterest, Townflex on TikTok, Townflex on YouTube, and Townflex on Google News.
