Adidas’ termination of Kanye West last year continues to negatively impact the business side of the company.
Today, Adidas CEO Bjørn Gulden announced the brand’s first quarter financial results for 2023, revealing that there has been a $441 million dip in year-to-year sales mainly across North America, Greater China, as well as the Europe, Middle East, and Africa (EMEA) regions largely due to the discontinuation of its popular Yeezy business in October 2022.
Additionally, Gulden echoed similar comments he made in February, saying that the brand has not decided what it plans to do with its existing Yeezy products. The company confirmed today that if it does elect not to repurpose its remaining stock, it would lower the company’s operating profit by an additional $551 million this year and incur one-off costs of up to $221 million.
This would result in a total of $772 million in operating losses in 2023. In February’s financial guidance meeting, Gulden stated a decision to not repurpose Yeezy stock could result in an overall $1.3 billion revenue loss this year, a number which was also cited in today’s report.
Adidas announced its decision to end its partnership with West in October, following months of him publicly expressing antisemitic views and chastising the brand. Last week, Adidas investors filed a class action lawsuit against the company, alleging that top executives at the sportswear giant including Adidas chief financial officer Harm Ohlmeyer and former CEO Kasper Rørsted were aware of the risks of working with Ye “as early as 2018” but failed to create precautionary measures to limit negative financial exposure if there was a sudden fallout between the two entities.
Despite the brand reporting its projected losses due to the Yeezy fallout, Gulden touted the brand’s Samba, Gazelle and Campus franchises are performing well in all markets, while Adidas’ collaborative drops with Bad Bunny, Ronnie Fieg, and Gucci have also been key sellers.