Adidas is set to lose up to $1.2 billion from unsold Yeezys
The company ended its relationship with Kanye West after he shared a number of anti-Semitic posts
Adidas is set to lose up to $1.2 billion (£1 billion) in revenue from unsold Yeezys.
In October, the company severed ties with Kanye West - with whom they collaborated to create the Yeezy range - after he shared a series of anti-Semitic posts on social media.
West - who has legally changed his name to Ye - seems to have well and truly demolished his career, at least in the mainstream, following a series of increasingly erratic and discriminatory statements.
And his fall from grace has had a huge impact on Adidas too.
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The German clothes giant is still reviewing ways to use its existing Yeezy stock, but whatever it does, it stands to lose hundreds of millions of dollars.
In a statement, the company said: "Adidas today published its financial guidance for 2023. While the company continues to review future options for the utilization of its Yeezy inventory, this guidance already accounts for the significant adverse impact from not selling the existing stock.
"This would lower revenues by around €1.2 billion ($1.28 billion) and operating profit by around €500 million ($534 million) this year. Against this background, Adidas expects currency-neutral sales to decline at a high-single-digit rate in 2023.
"The company’s underlying operating profit is projected to be around the break-even level.
"Should the company irrevocably decide not to repurpose any of the existing Yeezy product going forward, this would result in the write-off of the existing Yeezy inventory and would lower the company's operating profit by an additional €500 million this year."
Adidas CEO Bjørn Gulden gave a pretty damning assessment of the situation, but insisted he remained hopeful for the future.
"The numbers speak for themselves. We are currently not performing the way we should," he said.
"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.
"Together we will work on creating brand heat, improve our product engine, better serve our distribution and assure that Adidas is a great and fun place to work.
"Adidas has all the ingredients to be successful: A great brand, great people, fantastic partners and a global infrastructure second to none.
"We need to put the pieces back together again, but I am convinced that over time we will make Adidas shine again. But we need some time."
Topics: Fashion, Kanye West, Business, Money
Jake Massey