German multinational sportswear giant Adidas faces a potential revenue loss of €1.2 billion ($1.3 billion) in 2023 if it is unable to sell its existing Yeezy stock following the termination of its partnership with Kanye West and the Yeezy brand in October 2022.
As the company continues to evaluate future options for utilizing its Yeezy inventory, it revealed that not selling the existing stock would reduce revenues by approximately €1.2 billion ($1.3 billion) and operating profit by approximately €500 million ($534 million) this year.
Against this backdrop, Adidas anticipates a high-single-digit decline in currency-neutral sales in 2023, with the company’s underlying operating profit hovering around the break-even point.
The company also forecast one-time costs of up to €200 million ($213.7 million), leaving Adidas’ worst-case scenario for the year of a €700 million ($748 million) loss in 2023, should the company irrevocably decide not to repurpose any of the existing Kanye West’s Yeezy product going forward.
On Friday, Adidas shares experienced a significant decline of 11 percent after the recent announcement, plummeting to €139.26 ($148.7) and causing the company’s market capitalization to drop below the €29 billion ($31 billion) mark.
Adidas CEO Bjorn Gulden commented on the recent announcement by stating: “The numbers speak for themselves. We are currently not performing the way we should.”
He stated that 2023 will mark a significant milestone for Adidas as it undergoes a transformative period toward becoming a thriving and lucrative organization.
With unwavering commitment, the global sportswear powerhouse will prioritize the needs and expectations of its consumers, elite athletes, retail partners, and dedicated employees.
For West, who is now officially known as “Ye,” the termination of the lucrative deal with Adidas due to a series of antisemitic comments that sparked widespread outrage in October 2022 “caps a stunning, self-induced downfall” as the majority of his personal fortune stems from the multi-million dollar partnership.
“Without Adidas, Ye is now worth $400 million,” Forbes stated, adding that the rest of his fortune is made up of real estate, cash, a music catalog, and a five-percent stake in his ex-wife Kim Kardashian’s shapewear company, Skims.
