Adidas said it expects headwinds from the loss of the Yeezy business to persist in 2023, after officially parting from the brand and its controversial founder Kanye “Ye” West in October.
The German sportswear brand said it expects “significant adverse impact” from the Yeezy fallout in 2023, with revenues projected to be lowered by around € 1.2 billion and operating profit by about € 500 million, or $537 million at current exchange. Currency-neutral sales are expected to decline at a high-single-digit rate in 2023, with operating profit expected to break even.
Adidas also warned it could report an additional operating loss of up to € 500 million in 2023 if it does not rebrand and sell existing Yeezy product, which it previously indicated could likely be the case. Adidas has confirmed that it is the sole owner of all design rights to existing products as well as previous and new colorways under the partnership, though Ye is likely the owner of the Yeezy name.
Adidas also said it expects up to € 200 million ($215 million) in one-off costs this year, for a total loss of € 700 million, or $751 million at current exchange, in 2023.
Adidas CEO Bjørn Gulden, who assumed the CEO role in January, said in a statement that 2023 “will be a year of transition to set the base to again be a growing and profitable company.”
The company will focus on improving products, brand heat, distribution and working life for employees, Gulden said.
“The numbers speak for themselves,” Gulden said. “We are currently not performing the way we should.”
Adidas also posted preliminary results for 2022, which showed that sales were up 6% to € 22.5 billion. Operating profit was €669 million, with an operating margin of 3%. Net income was € 254 million in 2022, down from 2021, in line with the company’s projections from November.