ADS: Adidas Projects its First Annual Loss in Over Thirty Years
- Adidas has warned investors that is it likely to report an annual loss for the first time in more than 3 decades.
- The loss has been caused in part by the fashion brand cutting ties with controversial artist Kanye West.
- Its new CEO Bjørn Gulden said that 2023 will be a “transition year” for the company.
Adidas made headlines by cutting ties with Kanye West, after he caused outrage with a slew of controversial remarks on Twitter. He had been a brand collaborator with the fashion giant for several years, and his ‘Yeezy’ shoes made the company millions. Since severing ties with the artist however, Adidas seems to be in a little bit of a slump – announcing an underwhelming Q4 and predicting a difficult year ahead.
A stark warning
The company’s fourth quarter report did little to please investors. Adidas recorded an operating loss of $763m, a net loss from continuing operations of $482m, and a 1% decline in revenue. What’s worse however is that it now predicts 2023 to be a continuation of the trend. Adidas predicts a 2023 full year operating loss of $738m – which includes a potential loss of $500m by having to write off its Yeezy inventory. It would be the first time the company has recorded a full year loss since 1992, and West’s departure seems to be the driving factor.
What’s the plan?
The new CEO of Adidas, Bjørn Gulden, has only had the role since the start of the year. He said that 2023 will likely be a “transition year” for the company as it looks to scale back on discounting and inventories to revitalize its profitability. As for its share price, ADS has managed a 3.7% gain over the past week and a 13% gain since the start of the year. However it’s still down by 26% YoY with inflation causing changes to consumer spending habits.
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A matter of principal vs profitThe fallout from Kanye West’s anti-Semitic comments continues as brand’s begin to choose their principals over their profits.
- Adidas has officially ended its lucrative partnership with Kanye West, saying it does not tolerate hate speech after the rapper – who’s changed his name to Ye – made headlines for his anti-Semitic comments earlier this month, angering not only his fans and the broader population but many of the companies he has fashion ties with as well.
- Adidas stands to lose up to up to $650m after dropping Kanye and his popular Yeezy line – though the company has indicated that it may continue selling the products without the rapper’s name attached. Yeah, cause he’s gonna take that really well. The German brand’s stock dropped 7% on Tuesday as investors grappled with the impact on the balance sheet.
- Turns out business is in fact personal sometimes and Adidas isn’t the only one swapping profits for principals. Balenciaga and Vogue have cut ties, his talent agency and lawyer have dropped him, both Instagram and Twitter have restricted his account, and his streams and sales have plummeted – all this also means he is no longer on the Forbes billionaire list.
Chriatian Enriquez / Pexels
Adidas apologizesAdidas is getting super involved in the whole Metaverse thing, but an NFT stunt backfires after a technical error burns buyers.
- Adidas jumped on the NFT bandwagon last week, selling 30,000 of its "Into the Metaverse" collection of NFTs for ETH0.2 each.
- But a technical glitch delayed the minting process, which meant a bunch of transactions failed – leaving buyers stuck with high gas fees and nothing to show for it.
- Adidas has apologized and promised that the gas fees will be refunded. Didn’t stop the stock dropping over 3% on Monday though.
Those who think we’re going to pocket the money and run, that’s not Web3. Have faith. Those who felt the timezone wasn’t in your favor, our journey here is just beginning.