Image via Seth Wenig
Adidas has issued a warning that it may experience its first annual operating loss in more than three decades this year, primarily due to the possibility that it will have to write off the whole line of apparel and footwear bearing the Yeezy name.
The German sportswear manufacturer revealed on Wednesday that due to a probable €500 million ($527 million) impact relating to unsold Yeezy stock as well as the cost of a strategic assessment, it would experience an operating loss of €700 million ($736 million) this year—its first in 31 years.
Following the release of Adidas’ 2022 results and 2023 projection on Wednesday morning, the company’s shares (ADDDF) decreased 2.2%.
In October, the business ended its lucrative nine-year association with musician and Yeezy designer Ye (formerly known as Kanye West).
Adidas warned last month that the split, which occurred after Ye made a number of antisemitic remarks, might cause its annual revenue to fall by €1.2 billion ($1.27 billion) this year.
According to Adidas, the rupture reduced the company’s fourth-quarter revenue by about €600 million ($633 million).
Yet, the controversy seems to have increased demand for Yeezy sneakers from other retailers. John Mocadlo, the CEO of Impossible Kicks, a sizable online retailer of upscale footwear and apparel, claimed last week that demand for the shoes had increased 30% since about late October.
Adidas indicated without going into further detail that it could perform better this year if it “repurposes” certain of its Yeezy products.