Adidas warns of losses over unsold Kanye West sneakers

Adidas, the sportswear giant, has issued a warning over the potential impact on its profits from ending its partnership with rapper and fashion designer Kanye West, now known as Ye, last November.

The firm's CEO, Bjørn Gulden, stated that it could result in hundreds of millions of dollars in losses this year if it decides to scrap its remaining stock of Yeezy sneakers.

This announcement marks the fourth profit warning for Adidas since July and highlights the negative impact of the termination of its partnership with West, following his controversial anti-Semitic comments on social media. Gulden acknowledged the company's poor performance and stated, "The numbers speak for themselves. We are currently not performing the way we should."

Adidas revealed that the decision to dispose of its remaining Yeezy stock could result in a €500 million hit to its profits. Additionally, the company's expected business shake-up will cost another €200 million, potentially pushing the company to an operating loss of €700 million this year. The company projects a return to profit by 2024.

Last year's operating profit for Adidas fell to €669 million, two-thirds lower than in 2021, further emphasizing the challenges the company has faced. The announcement led to a 9 per cent decrease in Adidas' US-traded shares.

In addition to ending its partnership with Yeezy, Adidas has also faced other challenges over the past year. Gulden, who joined the company at the start of this year from rival Puma, took over after his predecessor was ousted following a series of profit warnings. In March, the company announced the closure of its shops and suspension of its online store in Russia, joining a number of global brands that pulled out of the country due to the invasion of Ukraine. The company's business in China was also impacted by the strict COVID measures implemented by Beijing, resulting in major cities being put into lockdown.