Adidas’ decision to terminate its collaborative partnership with Kanye West last year continues to have a negative impact on the business side of things for the brand.
The sportswear brand shared its financial guidance for 2023 today, confirming that it’s still reviewing how it plans to utilize its existing Yeezy inventory. One of the possible scenarios includes not repurposing its current Yeezy stock, which will result in a write-off that would decrease the company’s operating profit by an additional €500 million (around $537 million) this year. The decision to not repurpose Yeezy products would lower revenues by around €1.2 billion (around $1.29 billion) this year.
The brand also said it expects an unrelated one-off cost of €200 million (around $215 million) for a strategic review which aims to improve 2024 profits.
“The numbers speak for themselves. We are currently not performing the way we should…We need to put the pieces back together again, but I am convinced that over time we will make adidas shine again,” Adidas CEO, Bjørn Gulden, said in the press release.
Adidas’ discussion on how it plans to utilize its current Yeezy stock began in November, when the brand’s CFO Harm Ohlmeyer said during the Q3 2022 earnings call that Adidas owns the rights to all Yeezy designs and intends to make use of them as soon as this year—a move which is apparently still in consideration.
Adidas announced its decision to end its partnership with West in October after the rapper publicly bashed the company and subsequently made antisemitic comments on various media platforms. West signed with Adidas in 2013 and then entered into a long-term partnership with the brand in 2016 that was originally set to expire in 2026.
The release of Adidas’ 2023 financial guidance comes after news that Beyoncé’s Adidas Ivy Park clothing line is losing roughly $200 million in revenue according to the company’s annual projections.