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For the first time in 31 years, Adidas warned shareholders that the company expects to experience an annual loss in revenue.
The sportswear company projects a loss of $739 million in 2023, largely as a result of canceling its lucrative partnership with rapper and fashion mogul Kanye West.
By refusing to sell “Yeezy” products in its inventory, the company will lose roughly 500 million euros.
Adidas also blamed skyrocketing inflation, higher supply costs, and a weaker Chinese market for its loss.
CEO Bjorn Gulden said 2023 would be “a transition year.” They hope to regain profitability in 2024.
Adidas will slash its 2022 dividend, warning a split with rapper and fashion designer Kanye West could push it to its first annual loss in three decades this year https://t.co/0LiKQSS6wc pic.twitter.com/t4gZKwHvHq
— Reuters (@Reuters) March 8, 2023
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Adidas was one of several companies to sever ties with West following his anti-semitic rants last year. The German company said at the time it doesn’t tolerate “antisemitism or any other sort of hate speech.”
“After a thorough review, the company has taken the decision to terminate the partnership with Ye immediately, end production of Yeezy branded products and stop all payments to Ye and his companies. Adidas will stop the Adidas Yeezy business with immediate effect,” Adidas said in a statement.
The termination helped push Adidas into the red for the fourth quarter. The company reported Wednesday a net loss of 513 million euros ($540 million), compared to 213 billion euros in profit for the same quarter a year ago.