Adidas 2022 income drops, more pain ahead after end of Kanye tie-up
Feb 10, 2023 - 07:53 AM
FRANKFURT, GERMANY — Adidas’s net income fell heavily in 2022, according to preliminary results released on Thursday, with the German sportswear giant predicting major operating losses this year after ending a tie-up with Kanye West.
Net income for last year was 254 million euros ($272 million), a nearly 83 percent drop from 1.49 billion in 2021, the figures showed.
The end of the partnership with controversial rapper West would be a major contributor to the company suffering operating losses of up to 700 million euros this year, Adidas said.
“The numbers speak for themselves. We are currently not performing the way we should,” said Adidas CEO Bjorn Gulden, who was named to the job in November, as part of efforts to turn the company around.
“Adidas has all the ingredients to be successful… 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.”
Adidas halted its tie-up with West — now known formally as Ye — in October after he made a series of anti-Semitic outbursts.
The firm said it would end production of the highly successful “Yeezy” line designed together with West, which has brought in huge profits.
In its financial guidance for 2023 published Thursday, Adidas said there would be a “significant adverse impact” from not selling existing Yeezy stock.
This would lower revenues by around 1.2 billion euros, and operating profit by around 500 million euros, it said.
Adidas also expects one-off costs of up to 200 million euros in 2023 — and it said it could report an operating loss of as much as 700 million euros.
The company began a review of its relationship with West after he appeared at a Paris fashion show wearing a shirt emblazoned with “White Lives Matter”, a slogan created as a backlash to the Black Lives Matter movement.
Days later he was locked out of Twitter and Instagram over anti-Semitic threats.
Weeks after ending its partnership with Kanye, Adidas also said it was investigating claims against him after a report detailed alleged inappropriate behaviour.
US magazine Rolling Stone reported claims that the rapper played pornography to Adidas staff in meetings, and discussed porn and showed an intimate photo of ex-wife Kim Kardashian in job interviews.
In response, Adidas said it was not clear whether the claims were true but it had decided to launch an independent probe.
The artist was associated with rival sportswear company Nike for years but broke away in 2013, lending his name to Adidas as they launched their first Yeezy shoe in 2015 — a partnership that went on to make him a billionaire.
Along with Beyonce, Stella McCartney and Pharrell Williams, West has been one of the top names used by Adidas to boost sales, especially online.
US clothing company Gap and Paris-based fashion house Balenciaga have also ended tie-ups with West.
Gulden joined Adidas from rival outfitter Puma. As well as the fallout from the West controversy, he faces the task of improving sales that were hit by Covid restrictions in key market China.
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