Adidas said it could post an operating loss of €700 million in 2023 as it deals with the fallout from a dispute with rapper and former partner Kanye West. The German sports company announced that if it were to write off all existing stock of Yeezy sneakers, it could record such a loss this year.
Earlier, the company announced that its profit and revenue were affected by the damage from the discontinuation of the lucrative line. New CEO Björn Gulden is looking to bring a new era of creativity and optimism to a brand beset by crises on several fronts.
It is pursuing a new strategy towards “resuming profitable growth” by next year, which could cost up to €200 million.
Adidas has appointed the boss of its competitor as CEO
Björn Gulden, 57, is a former Norwegian professional soccer and handball player
“The numbers speak for themselves,” Gulden wrote in a statement on the company’s website. “At the moment we are not performing as we should”, he emphasizes.
Adidas will put its full focus on consumers along with its athletes, commercial partners and employees. The goal is to create “brand warmth,” improve products, better serve distributors, and make the company a “great and fun place to work.”
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“We have to put the broken pieces back together again. I am convinced that in time we will make Adidas shine again, we just need a little more time,” added Gulden.
The new manager started at Adidas in January this year after almost a decade at rival Puma. It was he who led the company to a positive turnaround that began after changing expectations for profit and sales growth.
His main focus at Adidas will be reviving the brand’s weak sneaker and apparel lineup and winning over customers in the US, Europe and China.
He will also have to find out if Adidas can sell or re-market Yeezy designs to customers without using the brand name.
Sales will decline at a high single-digit rate in 2023, the German company predicts. The sportswear group ended its lucrative design partnership with Ye, formerly known as Kanye West, at the end of October last year after he made a series of anti-Semitic and racist comments.
Adidas, however, became heavily dependent on the Yeezy line, which it called “one of the most successful in the history of the industry.”
Adidas reported a nearly 40% drop in profits. that’s why
The German sportswear giant reported a net profit of €310 million
