The consequences of Yeezy might lead Adidas to its initial yearly deficit in three decades.

Adidas has forecasted that it may suffer its first annual operating loss in over 30 years, with a potential hit of €500m ($527m) due to unsold Yeezy stock and the cost of a strategic review. The sportswear giant stopped its lucrative nine-year partnership with Yeezy Ye’s designer, the rapper formerly known as Kanye West, in October 2020, which reportedly led to a 600 million euros ($633m) hit of the company’s Q4 revenue. Adidas’ CFO Harm Ohlmeyer has called last year “a disappointing year” for the company, as its operating profit fell to 669 million euros, a 66% YoY drop, while sales in China, its largest market, fell 36% YoY. Despite this, Adidas hopes that 2023 will mark a turning point for the company, “to lay the foundations to be a growing and profitable company again,” said CEO Bjørn Gulden.
The company could potentially do better this year if it “reissues” some of its Yeezy products, the company said without elaborating. The German sportswear maker has already warned that its annual revenue could potentially plummet by €1.2bn ($1.27bn) in 2021 as a direct result of the split.
Adidas’ split from Yeezy was due to the rapper making a series of anti-Semitic comments. While the controversy has affected Adidas, it has also appeared to fuel demand for Yeezy sneakers through other sellers. Retailers, such as John Mocadlo’s Impossible Kicks, have reported a 30% increase in demand for these shoes since October 2020.
The leading sportswear maker’s rocky 2020 was also due to the impact of the coronavirus pandemic. However, Adidas believes that this year will be an opportunity for the company to recuperate and eventually “make Adidas shine again.” Despite its potential annual operating loss, the sportswear giant hopes to lay a strong foundation for growth and profitability over the next few years.

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