Adidas’ divorce from Kanye West could cost the company more than $1.3 billion in revenue after it cut ties with the rapper in the wake of his anti-Semitic remarks, the Germany-based sports apparel maker said.
Shares of Adidas fell by as much as 12.6% on Friday after the firm warned it could end the year at a loss for the first time in three decades as it struggles to sell unsold stock of Yeezy products.
The company said its financial guidance for 2023 “accounts for the significant adverse impact from not selling the existing stock” of Yeezy brand shoes and clothing.
Adidas said it was reassessing its strategy on Thursday. If the company fails to sell its Yeezy stock, its operating profit could take a hit of more than $533 million.
The company also said it expects sales to decline this year at a rate in the high single digits.
“The numbers speak for themselves. We are currently not performing the way we should,” said CEO Bjorn Gulden, who joined Adidas on Jan. 1 after switching from rival Puma and has promised a “year of transition” to make the sportswear giant profitable again.
Analysts had on average expected a 4% rise in 2023 revenue on a currency-neutral basis and operating profit of nearly $1.1 billion, according to figures on Adidas’ website.
West, who has changed his name to Ye, had his nine-year partnership with Adidas terminated in October and has been shunned by corporate America after a series of bizarre anti-Semitic rants.
In early December, Ye appeared on Alex Jones’ InfoWars wearing a hoodie and a face covering and unleashed an anti-Semitic diatribe while praising Hitler and the Nazis.
Ye’s terminated partnerships have reportedly cut his net worth from an estimated $2 billion to a comparatively paltry $400 million, according to Forbes.
The company faced criticism for not divorcing from the former billionaire sooner, which many chalked up to the fact that Ye-branded shoes raked in almost $2 billion in sales last year for Adidas, according to Morgan Stanley.
With Post Wires