Adidas (Herzogenaurach, Germany) announced that the existing stock of Yeezy merchandise it still has on hand could cost it up to $1.3 billion in revenue and $534 million in operating profit. That disclosure comes several months after the footwear and sporting apparel brand cut ties with Ye, the artist behind the Yeezy line, over antisemitic comments he made. (Ye is the artist formerly known as Kanye West.)
While Adidas continues to review future options for the utilization of its Yeezy inventory, the guidance it provided “already accounts for the significant adverse impact from not selling the existing stock,” its release said.
In addition, Adidas expects to report one-off costs of up to $200 million in 2023. These costs will be part of a strategic review the company is conducting aimed at reigniting profitable growth starting in 2024.
“The numbers speak for themselves. We are currently not performing the way we should,” said CEO Bjørn Gulden. “2023 will be a year of transition to set the base to again be a growing and profitable company. We will put full focus on the consumer, our athletes, our retail partners and our Adidas employees.”