FRANKFURT (AFP) – Adidas’s net income fell heavily in 2022, according to preliminary results released on Thursday, with the German sportswear giant predicting major operating losses this year after ending a tie-up with Kanye West.
Net income for last year was EUR254 million (USD272 million), a nearly 83 per cent drop from 1.49 billion in 2021, the figures showed.
The end of the partnership with controversial rapper West would be a major contributor to the company suffering operating losses of up to EUR700 million this year, Adidas said.
“The numbers speak for themselves. We are currently not performing the way we should,” said Adidas CEO Bjorn Gulden, who was named to the job in November, as part of efforts to turn the company around.
“Adidas has all the ingredients to be successful… 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.”
Adidas halted its tie-up with West – now known formally as Ye – in October after he made a series of anti-Semitic outbursts.
The firm said it would end production of the highly successful “Yeezy” line designed together with West, which has brought in huge profits.
In its financial guidance for 2023 published on Thursday, Adidas said there would be a “significant adverse impact” from not selling existing Yeezy stock.
This would lower revenues by around EUR1.2 billion, and operating profit by around EUR500 million, it said.
Adidas also expects one-off costs of up to EUR200 million in 2023 – and it said it could report an operating loss of as much as EUR700 million.
The company began a review of its relationship with West after he appeared at a Paris fashion show wearing a shirt emblazoned with ‘White Lives Matter’, a slogan created as a backlash to the Black Lives Matter movement.
Days later he was locked out of Twitter and Instagram over anti-Semitic threats.
Weeks after ending its partnership with Kanye, Adidas also said it was investigating claims against him after a report detailed alleged inappropriate behaviour.
US magazine Rolling Stone reported claims that the rapper played controversial materials to Adidas staff in meetings, and discussed mature content and showed an intimate photo of ex-wife Kim Kardashian in job interviews.
In response, Adidas said it was not clear whether the claims were true but it had decided to launch an independent probe.
