Yahoo Finance Adidas could lose up to $750 million this year from a Yeezy write-off
The ongoing fallout from Adidas' (ADDYY) decision to end its deal with Ye, the rapper formerly known as Kanye West, could see the company report a loss of nearly $750 million this year.
The company announced Thursday if it opts not to repurpose any of the inventory from Ye's 'Yeezy' line of products, it stands to forgo as much as €1.2 billion (or $1.29 billion) in revenue throughout 2023.
If the company chooses this option, Adidas would also take a €500 million profit hit this year and an additional €200 million one-off cost, bringing expected 2023 operating losses to €700 million, or about $750 million at current exchange rates.
The yearly profit loss would be Adidas' first in 31 years, according to the Financial Times.
"The numbers speak for themselves. We are currently not performing the way we should," Adidas CEO Bjørn Gulden said in a statement. "2023 will be a year of transition to set the base to again be a growing and profitable company. We will put full focus on the consumer, our athletes, our retail partners and our adidas employees."
The company is still reviewing “future options” but expects currency-neutral sales to decline at a high single-digit rate.
The news comes less than four months after Adidas severed its relationship with Ye. Adidas had built products around Ye since first launching Yeezy in 2015, but the relationship unraveled over the last year as Ye made several public comments supporting anti-semitic rhetoric.
"Adidas does not tolerate antisemitism and any other sort of hate speech,” the company said in an October statement. “Ye’s recent comments and actions have been unacceptable, hateful and dangerous, and they violate the company’s values of diversity and inclusion, mutual respect and fairness."
“These costs are part of a strategic review the company is currently conducting aimed at reigniting profitable growth as of 2024,” the company said in a release.
The sports apparel brand is facing more than just issues with Ye.
Beyonce's IVY PARK collaboration with Adidas came up $200 million shy of the company's 2022 revenue projections, according to the Wall Street Journal. Adidas announced a $718.6 million preliminary operating profit for 2022 on Thursday. That reflects a roughly two-thirds drop in profit on from 2021.
Shares of Adidas fell nearly 9% on Thursday.
Josh is a reporter and producer for Yahoo Finance.
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