Adidas reported a fourth-quarter loss of $763 million in 2022, primarily due to the termination of its partnership with Kanye West’s Yeezy brand in October 2022, after Ye made a series of antisemitic comments.
The termination of the partnership with Yeezy has resulted in a “transition” year for Adidas, and the company has projected a full-year operating loss of 700 million euros in 2023, which would be its first annual loss for 31 years.
Analysts estimate that Yeezy accounted for as much as 7% of total sales in its best years. New CEO Bjorn Gulden has pledged to refocus on the core of the business in order to “return to profitability in 2024” and rebuild the brand after dealing with the fallout from ending the West partnership. Apparently, virtue signaling has financial consequences! Check this out.
Adidas’ decision to sever ties with rapper Kanye West could result in the first annual loss for the German sportswear company in 31 years.
“The German sportswear maker said Wednesday that it would face an operating loss of €700 million ($736 million) this year … because of a potential €500 million ($527 million) hit related to unsold Yeezy stock, and the cost of a strategic review, ” reports CNN.
The company announced on Wednesday that it would slash its dividend by 79 percent as a result.
Adidas ceased its partnership with Kanye West last October after he claimed a Jewish cabal was using its influence to undermine him.
But the decision to part ways with the Yeezy line left Adidas with around $500 million worth of Yeezy sneakers.
Bjørn Gulden, Adidas CEO about Ye (fka Kanye West) :
“In my opinion, [Ye] is maybe the most creative, I would say, a person that has ever been in our industry,” pic.twitter.com/kicdQDEoRR
— Donda Times (@dondatimes) March 9, 2023
Perhaps Adidas should have stepped back for a moment and more closely evaluated the situation before pulling the plug on him. Unfortunately, considering the savage nature of the woke mob, when a situation like this happens, time is of the essence and the offending party must be swiftly dealt with, or your company risks the backlash as well. Adidas did what was mandated by their woke overlords, and now shareholders worldwide are feeling the effects.
The Washington Post reports that Adidas sees no solution to unload a quantity of unsellable merchandise on “a scale unseen in the fashion industry.”
Thereby the possibility of “literally burning the shoes” has emerged.
In addition to the warehouse of shoes, the company must now find a way to replace their banner Yeezy line. Kanye’s products produced around $2 billion a year in revenue.
Analysts say the Yeezy line amounted to as much as 15 percent of the net income at Adidas.
I would gladly take a few pairs off of their hands for the right price, but it would have to be a sweetheart deal. Unfortunately, I usually don’t wear Adidas. The quality generally isn’t great.
Perhaps next time Adidas will act with more financial caution rather than rushing to judgement and trying to be on the forefront of cancellation. Now, the only thing that has been cancelled are profits for the ironically German company.
Perhaps Joe Biden could cut a deal with Adidas and send the shoes to a certain Eastern European country in lieu of cash? Just a thought, and one I’m sure Yeezy would sign off on.
"*" indicates required fields
