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Adidas has unsold Yeezy brand goods worth 1.3 billion euros after rapper Ye’s jumps. The company predicts that this could translate into a loss of EUR 700 million. Even Bjorn Gulden, the Wonderworker CEO called on to save the day, has a grim prognosis. This could be Adidas’ first annual loss in 30 years.
Rapper Ye, also known as Kanye West, is a highly controversial figure, but has been an effective money-making marketing machine so far. Adidas has been associated with him for 9 years, it was his name that signed the Yeezy line of clothing and shoes under the Adidas umbrella.
At the end of last year, after the musician’s anti-Semitic statements, the sports giant broke off cooperation with him.
The Wonderworker CEO takes over Adidas
This did not solve all the problems. Warehouses and stores stock Yeezy goods worth as much as EUR 1.2 billion.
Hence, Adidas CEO Bjorn Gulden announced that the company will record an operating loss of €700 million in fiscal year 2023
($750 million). Adidas is now looking for a way to reduce losses.
As “Bloomberg” writes, Gulden himself is an interesting character. It is a representative of the so-called CEOs-miracle workers, i.e. managers who in their career path have specialized in pulling companies out of problems.
It was he who raised Pandora. It was he who pushed Puma up in the last few years.
He doubled its sales, tightened its focus on sport by signing contracts with Arsenal and
Manchester City
increased brand recognition through a partnership with rapper Jay-Z.
Gulden was appointed president of Adidas in November, and took over the reins in January. He has just moved to Adidas from the competitive Puma.
This week, he gave investors some grim news. “Currently, we are not performing the way we should. In time, we will make Adidas shine again, I am sure of it,” he quotes the president of “Bloomberg”. As he adds, it was probably the most gloomy news of his career.
If true, Gulden will report Adidas’ first annual loss in 30 years.
Adidas shares started to rise after the change of CEO. However, with this announcement, Gulden cooled down the enthusiasm of investors who apparently
they assumed more cautious and balanced forecasts of losses, and not on such a large scale. Shares fell 13% on Friday.
As Thomas Joekel from the Union Investment Fund, one of the main shareholders of Adidas, explained, quoted by “Bloomberg”,
Gulden deliberately sets expectations very low to buy the company time to reorganize.
Volker Bosse of Baader Bank said the cuts in sales and profits are “much deeper than anyone predicted”.
And there are many challenges. Adidas needs to win back a Chinese client who is replacing Western brands with local ones. He must also find another source of income in place of the Russian market. Russia is already lost territory for Adidas, which is a painful blow because it has historically beaten Nike in this market. He also has internal issues to deal with regarding the attitudes of employees who question the company’s diversity policy.
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Source: money.pl
