Adidas warn of major profit losses after ending Kanye West Yeezy partnership

Adidas has warned of potential major profit losses after severing ties with Kanye West last year.

The sportswear company terminated its partnership with West in October 2022 in light of the rapper posting a series of antisemitic comments on social media.

In a statement at the time, an Adidas spokesperson said Ye’s remarks and behaviour was “unacceptable, hateful and dangerous”, adding that he had violated the firm’s “values of diversity and inclusion, mutual respect and fairness”.

Earlier reports claimed that Adidas had placed the partnership under review over matters not necessarily pertaining to West’s hate speech.

Following a “thorough review”, it was confirmed that the brand would immediately stop production of its line of Yeezy products and halt payments to the artist and his companies.

Adidas said that it was expected to take a hit of up to €250million (£217million) to its net income in 2022 as a result of the decision.

Now, as BBC News reports, Adidas has published its financial guidance for 2023 in which the sports giant refers to “the significant adverse impact from not selling the existing [Yeezy] stock”.

“This would lower revenues by around €1.2billion and operating profit by around €500million [£443m] this year,” the document reads.

“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.”

Additionally, the brand expects a shake-up of the business to set it back a further €200million (£177m). That could result in Adidas facing a €700million (£618m) operating loss in 2023. However, the company expects to return to profit in 2024.

The firm’s also revealed that its profit for last year had fallen to €669millon (£591m).

Adidas explained that it is continuing to “review future options for the utilisation of its Yeezy inventory”.

Bjørn Gulden, CEO of Adidas, said in a statement: “The numbers speak for themselves. We are currently not performing the way we should.

“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.”

Last November, it was reported that Adidas’ chief executive and other senior figures at the company had talked about the potential fallout from its relationship with West as long as four years prior.

It came after a report from Rolling Stone made claims over the treatment of employees at Yeezy, with some ex-staff alleging a “cult-like atmosphere” at the brand’s office. The outlet was unable to contact West for the article.

Later, an open letter from workers at Yeezy and Adidas accused the rapper of using porn and “mind games” to bully and manipulate staff.

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