The expensive departure from the controversial rapper Kanye West and his “Yeezy” products brought the sporting goods manufacturer Adidas a loss in the first quarter. The bottom line was a minus of 24 million euros in the first three months of 2023, as Adidas announced on Friday in Herzogenaurach. At the same time last year, the company still posted a profit of 310 million euros.
Overall, the new CEO Björn Gulden sees 2023 as a year of transition. He confirmed the forecast, which assumes a decline in sales in the higher single digits and a neutral operating result. “2023 will be a bumpy year with disappointing numbers where we do not aim to maximize our short-term financial results. It is a transitional year to lay a strong foundation for a better 2024 and a good 2025 and beyond.” said guilders.
The rapper had launched expensive lifestyle products together with Adidas – a highly lucrative business for both sides. “When I was still with the competitor, I sat there with big eyes,” said CEO Björn Gulden, who switched from local rival Puma to Adidas at the beginning of the year. “Yeezy” meant billions in high-margin sales for Adidas.
Adidas had to end cooperation with West
After anti-Semitic statements by West, Adidas had to stop working together. Should the products still in stock have to be completely destroyed, this would burden the annual result by 700 million euros. In addition, there is a class action lawsuit by investors in the USA, who accuse Adidas of not having reacted in time. CFO Harm Ohlmeyer did not provide any information on the status of the proceedings on Friday and only said that they would defend themselves vigorously.
Despite the problems, Gulden considers the first quarter to be slightly better than expected. At just under EUR 5.3 billion, currency-adjusted sales were at the previous year’s level. Adidas is primarily struggling with large inventories. However, these are already 300 million euros lower than at the beginning of the year.
Gulden wants to invest a lot in the US business this year, including more in football and basketball. In North America, Adidas lost about 20 percent of its sales in the first quarter – if you exclude the “Yeezy” products, there is still a minus of five percent. According to Gulden, things are gradually picking up again in China after a long dry spell.
