Adidas, the German multinational sportswear corporation, announced a significant loss in the fourth quarter of the year and reduced its dividend following the costly termination of its partnership with Kanye West’s Yeezy brand in October. The company recorded an operating loss of 724 million euros ($763 million) in the fourth quarter and a net loss from continuing operations of 482 million euros. Adidas will propose a reduced dividend of 70 euro cents per share at its annual general meeting scheduled for May 11, compared to 3.30 euros per share in the previous year, to reflect its poor performance.
According to recent reports, Adidas has projected an operating loss of 700 million euros for the full year 2023, which would mark the company’s first annual loss in 31 years. The projection includes an expected 500 million euro inventory write-off related to its terminated Yeezy partnership and 200 million euros in one-off costs. Moreover, the company reported a decline of 1% in currency-neutral revenues during the fourth quarter due to the discontinuation of the Yeezy partnership, which is expected to continue in 2023, with a high-single-digit rate decrease anticipated for the year.
Adidas terminated its profitable partnership with rapper and fashion designer Ye, formerly known as Kanye West, in October, following a series of antisemitic remarks made by the artist. Prior to the partnership’s termination, the sportswear company had warned of a significant revenue decline if it failed to sell its extensive, unsold inventory of Yeezy footwear. The company has projected that its underlying operating profit will be at a ‘break-even level’ due to the loss of potential sales worth €1.2 billion from the unsold Yeezy stock.