Adidas posted a big first-quarter loss on Friday as its split with controversial US rapper Kanye West dented the German sportswear giant’s bottom line.
The company posted a net loss of 39 million euros ($43 million) from January to March, compared with a profit of 482 million euros in the year-earlier period.
Its operating profit was 60 million euros, a drop of more than 85 percent from a year earlier, while sales were almost flat at 5.28 billion euros.
However, the company suffered a €400 million loss related to the end of production and sales of the highly successful Yeezy line designed in collaboration with West.
Adidas severed its relationship with West – now known as Ye – in October after a series of anti-Semitic statements.
The company announced in February that it could face an operating loss of 700 million euros this year if it decides to write off the value of its entire Yeezy inventory.
Adidas’ new boss Bjorn Gulden said 2023 would be a “transition year”.
“We just need some time. 2023 will be a year full of disappointing numbers where maximizing our short-term financial results is not our goal,” he said in a statement.
But he has to face countless challenges to put the company on a better footing.
In addition to Kanye’s split, Gulden needs to revive Adidas’ business in key Chinese markets, which have been hit by prolonged Covid-19 lockdowns.
First quarter sales were down in China and the United States, markets particularly affected by the Yeezy line’s discontinuation.
But there were gains in Latin America and elsewhere in Asia-Pacific.
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