Adidas reports first loss in 30 years on Kanye fallout

FRANKFURT, Germany — Adidas reported its first loss in over three decades due to the fallout from the end of its collaboration with Kanye West, but the company insisted it was starting to turn its fortunes around.

In late 2022, the German sportswear giant ended its contract with the US rapper, now known formally as Ye, after he triggered an outcry with a series of anti-Semitic social media posts.

Adidas and West had designed the blockbuster line of Yeezy trainers together, and the collapse of the partnership robbed the company of a vital revenue stream, and left it saddled with a massive stock of unsold footwear.

Adidas registered a loss of 75 million euros (P4.54 billion) in 2023 following a profit of 612 million euros (P37 billion) the previous year. It was the company's first net loss since 1992, Adidas said.

But CEO Bjorn Gulden, who was brought in to lead the company from rival outfitter Puma shortly after the West tie-up fell apart, struck an upbeat tone.

"It will take a long time to turn the business (around)... The result is of course not good enough," he told a press conference. "But it builds the base to actually achieve what we have promised."

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The 2023 results were not as bad as had been previously feared, and by "2025 we should already be a good company and by 2026 we should be a really healthy company," he said.

'Transition year'

Revenues fell by five percent to 21.4 billion euros (P1.3 trillion), and were hit particularly hard in the United States due to the discontinuation of sales of Yeezy trainers.

Adidas has been gradually seeking to offload the Yeezy trainers, with two sales in 2023 bringing in 750 million euros (45.4 billion). However, this is below the 1.2 billion euros (P72.6 billion) of revenue they had generated in 2022.

The company expects to sell off the final Yeezy shoes this year at cost, resulting in revenues of around 250 million euros (P15.1 billion).

While sales fell heavily in North America, and are expected to keep declining this year, they picked up strongly in China, in good news from an important market which had suffered due to the country's tough coronavirus