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Adidas has announced that it expects its revenues to drop at least €1.2bn (£1.1bn) as a result of its split with Kayne West.
The company also expects its operating profit to drop €500m (£442m) and is still reviewing its options for its existing Yeezy stock. Its current guidance already accounts for not selling this stock.
Against this background, Adidas expects currency-neutral sales to decline at a high-single-digit rate in 2023. Underlying operating profit is projected to be around the break-even level.
It revealed that should the company decide not to repurpose any of the existing Yeezy product, it would result in the write-off of the existing Yeezy inventory and would lower the company’s operating profit by an additional €500m (£442m).
In addition, Adidas expects one-off costs of up to €200m (£177m) 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 €700m (£619m) in 2023.
CEO Bjørn Gulden said: “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.
“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.”
