Adidas warns of huge losses following fallout with Kanye West; details here

Adidas broke its ties with rapper and fashion designer Kanye West in October 2022 following some anti-Semitic comments made by the celebrity. In wake of the termination of the contract, the sportswear behemoth warned that the move will make a huge impact on its profit as the company has been struggling to sell the remaining stock of Yeezy shoes. On 9 February, the German firm revealed that the “significant adverse impact of not selling the existing stock” from the formerly lucrative Yeezy partnership will cause sales to decline at a high single-digit rate in currency-neutral terms, as per a report in the Wall Street Journal. Adidas predicted this would lead to a loss of 500 million euros in operating profit and 1.2 billion euros in overall revenues. Furthermore, the company stated that it has been still assessing whether it would be given permission to sell its remaining Yeezy stock by repurposing them under a different brand. The inability to do so would result in a 700 million million euro operating loss this year, with 500 million euro reduction in operating profit and 200 million euros in one-off costs. At the beginning of this year, Adidas welcomed its new boss Bjorn Gulden who joined the firm after parting his way with its local rival Puma. The announcement highlights the magnitude of the challenge the new Adidas Chief Executive will have to overcome. In an effort to acknowledge the challenge, Gulden noted, “The numbers speak for themselves. We are currently not performing the way we should.” However, he claimed that Adidas would eventually get back on track, even though 2023 would be a year of transition for the business. Apart from the consequences of the split with West, Adidas is also battling a tricky Chinese market, following Beijing’s strict zero COVID measures. It has also been struggling with the below-par sales of the flagship partnership with Beyonce. In March 2022, the sportswear brand, which was one of many international companies to leave Russia in the aftermath of the invasion of Ukraine, decided to close its stores there and cease operations for its online store. Adidas on Thursday also released its preliminary financial results for 2022. Based on the report, operating profit was recorded at 669 million euros, down two-thirds from 2021, while revenue increased by 6 percent to 22.5 billion euros. Net income from continuing operations dropped from 1.49 billion in 2021 to 254 million euros. Adidas is expected to release its official 2022 results next month. Read all the Latest News , Trending News , Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.