Yeezy Yikes! After dropping Kanye West, adidas is now expecting to lose $740 million due to unsold Yeezy shoes and stocks, marking the company’s first annual loss in over 30 years.
RELATED: All Falls Down: Balenciaga, adidas & J.P. Morgan Chase All Face Troubles After Dropping Kanye West
Post-Kanye: adidas Expects To Lose $740M Due To Unsold Yeezy Shoes & Stock, Marks First Annual Loss In 31 Years
About a month ago we shared an article about Balenciaga, J.P. Morgan Chase and adidas all facing troubles after dropping Kanye West.
Well, the snowball continues to build up for adidas as it is now being reported that the brand expects to face its first annual loss in 31 years because they cannot offload a stockpile of Yeezys. Subsequently, adidas faces a loss of $740 million for 2023, after reporting a fourth quarter operating loss of $763 million.
As we all know, Ye had a very tumultuous year in 2022 after revealing some remarks that were deemed anti-Semitic. And things only continued to pile up for the Chicago rapper after he continued to double down on his personal views.
Besides backlash from some angry fans and critics online, Ye ended up getting dropped from his partnerships with luxury fashion brand Balenciaga, adidas and financial institution J.P. Morgan Chase. After cutting ties with Ye and his Yeezy brand in October 2022, adidas would later reveal in 2023 that they might end up losing over $1 billion in revenue.
On Wednesday (March 8), the German shoe company reported their $763 million loss in the fourth quarter of 2022, and for 2023, the brand projects that it will lose $740 million, marking the company’s first annual loss in 31 years.
According to a report published by the brand, underlying operating profits are expecting to “be around break-even level reflecting sales loss of around € 1.2 billion [$1.28B USD] and corresponding negative operating profit impact of around € 500 million [$530M USD] from potentially not selling Yeezy stock.”
They added that their operating loss is expected to “be € 700 million [$740M USD], including additional negative impact of € 500 million [$530M USD] from potential Yeezy inventory write-off and up to € 200 million [$212M USD] one-off costs.”
adidas CEO Bjørn Gulden stated, “2023 will be a transition year to build the base for 2024 and 2025. We need to reduce inventories and lower discounts. We can then start to build a profitable business again in 2024. adidas has all the ingredients to be successful. But we need to put our focus back on our core: product, consumers, retail partners, and athletes.
We will work on strengthening our people and the adidas culture. Motivated people and a strong adidas culture are the most important factors to build a unique adidas business model again.
A business model built to focus on serving our consumer through both wholesale and DTC, that balances global direction with local needs, that is fast and agile, and of course, always invests in sports and culture to keep building credibility and brand heat. adidas is a fantastic brand, a fantastic company with great infrastructure and great talented people. We will bring it back to be the best sports brand in the world once again.”
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