Adidas reportedly the company could lose more than $1 Billion after dropping Yeezy’s Kanye West
Adidas loses major profits after ending its partnership with hip-hop mogul and fashion designer YE last November.
The YE Effect: Adidas could take €1.2bn revenue hit if it writes off Kanye West’s Yeezy stock
Adidas’ business breakup with Ye formerly known as Kanye West could cost them over $1 Billion.
The firm's new boss Bjorn Gulden said it could lose hundreds of millions of dollars this year if it decides not to sell its stock of Yeezy sneakers.
Chief executive Gulden has been with Adidas for just six weeks, and he’s already warning that Year 1 will be a mess. The sportswear cut ties with Ye, after he posted anti-Semitic comments on social media.
Adidas shares fell more than 12 percent on Friday morning wiping roughly 3 billion euros, or about $3.2 billion, in market value after the German sportswear giant issued its fourth profit warning in the past six months and said it expected big losses in 2023.
The announcement marks the company's fourth profit warning since July.
“The numbers speak for themselves. We are currently not performing the way we should," Adidas' chief executive Bjørn Gulden, said in a statement.
Adidas said it was still deciding whether to scrap its remaining Yeezy stock and would take a €500m (£443m) hit to its profits if it is all written off.
The company also expects a shake-up of the business to cost a further €200m. That could mean Adidas is pushed into a €700m operating loss this year. Although the company expects to return to profit in 2024.
At the same time the company revealed that its profit for last year had fallen to €669m.
In October, the company announced that it was ending the highly profitable partnership with West after he caused an outcry over his anti-Semitic comments.
While the decision to end its partnership with Yeezy had a major negative impact on Adidas, it has also faced other challenges over the last year.