Europe’s largest sporting goods manufacturer Adidas remains in crisis mode for the time being. CEO Björn Gulden, who has changed from competitor Puma, expects a drop in currency-adjusted sales in the high single-digit percentage range for the current year, partly because of the political and economic uncertainties.
The need to reduce high inventories also contributes to this. A few weeks ago, Gulden had to issue a profit warning because of the loss of business with Yeezy products, which were created in collaboration with scandal rapper Kanye West.
The operating result could be up to 700 million in the red for the first time in decades. “2023 will be a transitional year to lay the foundation for 2024 and 2025,” said Gulden when presenting the annual figures on Wednesday. The Norwegian replaced Kasper Rorsted as CEO at the beginning of the year. Adidas has to pay the Danes up to 16 million euros.
Low dividend
After the slump in profits last year, shareholders have to adjust to a significantly lower distribution. They are to receive a dividend of EUR 0.70 per share after EUR 3.30 in the previous year, as Adidas further announced. In 2022, the group was struggling with high inflation and problems in China. Adidas has been more successful there for years than industry leader Nike and local rival Puma.
In addition, the cooperation with Kanye West was terminated, among other things, because of anti-Semitism allegations against the rapper. West’s Yeezy products contributed 1.2 billion euros to sales and 500 million euros to profits. Profit from continuing operations collapsed from almost 1.5 billion to 254 million euros. The sporting goods manufacturer thus confirmed the preliminary figures it had already presented.
In the fourth quarter there was even a loss of 482 million euros after a profit of 123 million euros a year earlier. With the end of the Yeezy cooperation, Adidas lost around 600 million euros in sales, which rose by a total of one percent to 5.2 billion euros. Currency-adjusted, Adidas posted a minus of one percent. The Yeezy issue will also weigh on the group in the current year.
