After severing its collaboration with musician and fashion designer Kanye West last November, Adidas has issued a warning about a potential significant impact on its profitability.
The company might lose hundreds of millions of dollars this year if its stock of Yeezy sneakers is not sold, according to the new leader of the company.
Ye West, who works for the sportswear firm, was fired after he made anti-Semitic remarks on social media.
The corporation has issued a profit warning four times since July with this news.
The chief executive of Adidas, Bjrn Gulden, stated in a statement, “The figures speak for themselves: We are not currently functioning as we should.
Adidas stated that it was still considering whether to get rid of the remaining Yeezy stock and that doing so would cost them €500 million (£443 million) if written off.
The firm estimates that restructuring the business will cost an additional €200 million. This might cause Adidas to have an operational loss of €700 million this year. Nevertheless, the business anticipates turning a profit in 2024.
The business also said that its earnings for the previous year had decreased to €669 million.
After West sparked a backlash with his anti-Semitic remarks, the business announced in October that it was ending the extremely lucrativea agreement with him.
Adidas experienced additional difficulties over the last year in addition to the decision to stop its collaboration with Yeezy, which had a significant negative effect on the company.
The firm, which joined a host of international companies that withdrew from Russia in the aftermath of the invasion of Ukraine, said in March that it would shut down its physical locations there and cease operations for its online store.
Beijing’s draconian zero Covid policies, which resulted in the lockdown of major cities nationwide, had an adverse effect on the company’s commercial operations in China.