After splitting with the artist formerly known as Kanye West, Adidas is still trying to figure out what to do with 1.2 billion euros ($1.3 billion) worth of Yeezy sneakers.
This has resulted in a significant loss for the German sportswear manufacturer at the end of 2017 and future pain expectations.
Adidas Vs. Kanye West
The major German sportswear company reported an operating loss of 724 million euros ($763 million) for the fourth quarter and a net loss of 482 million euros from continuing operations.
At its annual general meeting on May 11, the business will propose a dividend of 70 cents per share, down from 3.30 euros per share in 2021.
When he made a number of antisemitic remarks, Adidas ended its hugely lucrative association with rapper and fashion designer Ye, formerly known as Kanye West, the face of Yeezy, in October.
If the corporation couldn’t get rid of its massive unsold inventory of Yeezy shoes, revenues would take a significant hit.
According to CEO Bjorn Gulden, selling the popular shoe line would include paying royalties to Ye, who was fired by Adidas five months ago after making anti-Semitic statements on social media and in interviews.
He mentioned several variables regarding what to do with the shoes that are currently stored in warehouses during an earnings call on Wednesday.
Read more: Full moon in 2023 will be the largest and brightest so far; When will you be able to see it?
Recycling Solutions
Although some businesses have provided recycling options, destroying them could create sustainability difficulties, according to Gulden, who was appointed CEO following the uproar over Ye’s comments. Restitching them in order to sell them while obscuring the Yeezy brand “is not very honest, therefore it’s not an option,” he continued.
“The goods would come back again very quickly because of their high market value, so suggestions to donate them to those in need in locations like earthquake-stricken Syria or Turkey aren’t really an option,” Gulden said.
With the exception of greater China, all markets saw growth in 2022 in terms of currency-neutral revenues, with double-digit growth seen in North America and South America. Net income from ongoing operations was 254 million euros ($267 million) while operating profit totaled 669 million euros.
During morning trade in Europe, Adidas shares decreased 1.7%, but they are still up more than 11% for the year. Adidas cut relations with Ye in October, after other companies had been under pressure to do the same due to the rapper’s harsh comments towards Jews and other groups.
Currently, the business is attempting to replace its flagship Yeezy brand, which experts have estimated to account for as much as 15% of its net income and find new ways to become profitable.
Read more: Amazon CEO Jeff Bezos $500 million yacht spotted sailing for the first time!
