Adidas AG shares slumped lower in German trading Friday after the sportswear group said full-year sales would likely decline sharply from 2022 levels thanks in part to its decision to cut ties with the American entertainer Kanye West.
Adidas severed its relationship with West -- also known as Yeezy or Ye -- late last year following a series of anti-Semitic comments made through his verified social media accounts. The group said writing down the Yeezy-branded stock it still owns could lop as much as €500 million from its 2023 operating profit, with a further €200 million pegged as cost linked to its turnaround plans.
Adidas could 're-purpose' the inventory, however, and sell it without its current branding, but not selling Yeezy products, which were designed by West under its previous partnership, could cost around €1.2. billion in full-year sales, said new CEO Officer Bjorn Gulden.
Overall sales, Adidas said, will likely decline by a "high single digit" rate this year, compared to a consensus forecast of a 4% gain, as key markets in China continue to struggle and consumer spending power fades alongside higher inflation rates in the U.S. and Europe.
“2023 will be a year of transition to set the base to again be a growing and profitable company. We will put full focus on the consumer, our athletes, our retail partners and our adidas employees," said Gulden. "Together we will work on creating brand heat, improve our product engine, better serve our distribution and assure that adidas is a great and fun place to work. adidas has all the ingredients to be successful."
"We need to put the pieces back together again, but I am convinced that over time we will make adidas shine again," he added. "But we need some time.”
Adidas shares were marked 8.96% lower in Frankfurt trading and changing hands at €75.16 each, extending their six-month decline to around 16%.
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