With Kanye West’s separation, Adidas will reduce its dividend.
Adidas, the German sportswear company, reported a significant loss for the fourth quarter and announced a reduced dividend following the costly termination of its partnership with Kanye West’s Yeezy brand in October.
The company suffered an operating loss of €724 million ($763 million) for the fourth quarter and a net loss of €482 million from continuing operations. The annual dividend was cut to 70 euro cents per share, compared to €3.30 per share in 2021. The termination of the Yeezy partnership caused a 1% decline in currency-neutral revenues in the fourth quarter, with a high-single-digit decline expected for 2023.
Adidas forecasts a full-year operating loss of €700 million in 2023, its first annual loss in 31 years. The estimate includes a €500 million hit from potential Yeezy inventory write-off and €200 million in one-off costs.
Adidas ended its lucrative partnership with rapper and fashion designer Ye, formerly known as Kanye West, after he made a series of antisemitic comments. The termination has caused a loss of 1.2 billion euros in potential sales from unsold Yeezy stock, leading to the company’s underlying operating profit to be “around break-even level.”
New Adidas CEO Bjørn Gulden announced that 2023 will be a transition year for the company as it reduces inventories and lowers discounts to return to profitability in 2024. He highlighted the importance of focusing on the company’s core values, such as product, consumer satisfaction, retail partners, and athletes.
Despite a 1% increase in currency-neutral revenues in 2022, the company experienced a decline in sales in greater China, and an operating loss in the fourth quarter due to inventory write-offs and one-off costs related to the termination of the Yeezy partnership. Adidas shares fell 1.7% in morning trading in Europe.
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