adidas Reports $540 Million Loss After Terminating YEEZY Partnership

adidas reported a net loss of $540 million in the fourth quarter of 2022, following the termination of its partnership with Kanye West.

The sneaker brand’s fourth-quarter losses can also be blamed on rising supply-chain costs and China’s lowered revenue. The company is anticipating further losses, with forecasts predicting an estimated $527 million USD decline in earnings, if the German sportswear label decides to forego repurposing its still-stocked YEEZY products this year.

“2023 will be a transition year to build the base for 2024 and 2025,” said Bjørn Gulden, CEO of Adidas, in a statement. “We need to reduce inventories and lower discounts. We can then start to build a profitable business again in 2024. Adidas has all the ingredients to be successful. But we need to put our focus back on our core: product, consumers, retail partners, and athletes.”

Despite the losses Q4 net sales measured roughly $5.5 billion, marking just a 1.3% increase from the same quarter in 2021.

adidas continue to struggle with what to do with the Yeezy shoes now stacked in warehouses. During an earnings call the CEO pointed to “many variables”. Destroying them could “raise sustainability issues,” though some companies have offered recycling solutions, said Gulden. Restitching them to hide the Yeezy brand so they could be sold “is not very honest, so it’s not an option,” he added.

If Adidas does decide to sell the shoes, “I can promise you that the people that have been hurt by this will also get something good out of it and get donations and proceeds in different ways, shapes or forms,” the CEO said.

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