Should the company irrevocably decide not to repurpose any of the existing Yeezy product going forward, this would result in the write-off of the existing Yeezy inventory and would lower the company’s operating profit by an additional €500 million this year, Adidas said in a press release.

Germany-based leading global sportwear brand Adidas expects currency-neutral sales to decline at high-single-digit rate in 2023. Primarily due to the significant adverse impact from not selling the existing Yeezy stock, the company expects the revenues to reduce by around €1.2 billion and operating profit by around €500 million this year.

In addition, adidas expects one-off costs of up to €200 million in 2023. These costs are part of a strategic review the company is currently conducting aimed at reigniting profitable growth as of 2024.

If all these effects were to materialise, the company would expect to report an operating loss of €700 million in 2023.

“The numbers speak for themselves. We are currently not performing the way we should”, said Adidas CEO Bjorn Gulden. “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. Together we will work on creating brand heat, improve our product engine, better serve our distribution, and assure that Adidas is a great and fun place to work. Adidas has all the ingredients to be successful: a great brand, great people, fantastic partners, and a global infrastructure second to none. We need to put the pieces back together again, but I am convinced that over time we will make Adidas shine again. But we need some time.”

In 2022, based on preliminary unaudited numbers, Adidas revenues increased 1 per cent in currency-neutral terms. In reported terms, sales were up 6 per cent to € 22,511 million during the 12-months period (2021: €21,234 million). The company’s gross margin reached a level of 47.3 per cent (2021: 50.7 per cent) in 2022. Adidas generated an operating profit of €669 million last year (2021: €1,986 million), reflecting an operating margin of 3 per cent (2021: 9.4 per cent). Net income from continuing operations was €254 million in 2022 (2021: €1,492 million).

Fibre2Fashion News Desk (DP)