After dropping Kanye, Adidas stayed with Yeezy gear
Adidas announced Wednesday that it was still weighing its options regarding its vast inventory of Kanye West’s Yeezy products following its end to its partnership.
The group announced its 2022 full year results and stated that the possibility of not selling West-related apparel and footwear would result in a revenue loss equivalent to 1.2 billion euros ($1.3billion).
Adidas ended its partnership with West, now known as Ye, in October following a series anti-Semitic outbursts.
The group ended production on the highly successful Yeezy lines, which were co-designed with West.
It stated that if the company decided not to repurpose any existing Yeezy products going forward, it would have to write off the entire inventory.
According to it, this would result in a decrease of 500 million euros in operating profit for the company by 2023.
Adidas also said that it could suffer an operating loss of 700 millions euros in 2023 due to one-off costs estimated to exceed 200 million euros for a company strategic review.
Bjorn Gullen, the new chief executive officer of the group, stated that the company will use 2023 to “transition years” in order to build the foundation for 2024-2025.
We need to lower inventories and offer lower discounts. He said that we can then build a profitable business again in 2024.”
The next year is shaping up to be a pivotal year for sporting apparel manufacturers, with the European football championships as well as the Olympic Games taking places.
Adidas confirmed preliminary results in February, with Wednesday’s announcement that net profit declined by 83 per cent to 254 millions euros in 2022.
It faced “elevated risks of recession in Europe, North America and uncertainty about the recovery in Greater China” in addition to its woes regarding the Yeezy Line.
It added that the company’s revenue growth will also be affected by initiatives to reduce high inventories.
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