Adidas Reports First Annual Loss in 30 Years Following Kanye West Split

Adidas, the renowned German sportswear giant, disclosed its first annual loss in over three decades in 2023, marking a notable downturn linked to its fallout with rapper Kanye West.

The brand has been navigating through challenges since severing ties with West in October 2022, including the suspension of sales for the profitable Yeezy sneaker line.

Under the leadership of CEO Bjorn Gulden, Adidas resumed selling Yeezy sneakers to clear remaining stock, while also focusing on popular products like the Samba and Gazelle shoes and improving relationships with retailers. Since Gulden’s tenure, Adidas shares have rebounded, surpassing the performance of Nike and Puma.

“While 2023 presented challenges, the year ended better than initially expected,” remarked Gulden.

Adidas anticipates a recovery in its core business, excluding Yeezy, in 2024, with double-digit growth projected for the latter half of the year.

Despite posting a net loss of 58 million euros, its first since 1992, Adidas’s board intends to propose an unchanged dividend of 0.70 euros ($0.7650) per share based on its 2023 performance. Adidas shares were expected to decline by 2% at the opening.

The company anticipates a decline in North American sales this year, attributing it to an overstocked market. However, significant sales growth is expected in all other markets.

Adidas aims to reclaim market share from competitors like Nike, despite an overall decrease in demand for sportswear. The brand has found success with low-rise suede “terrace” sneakers such as the Samba and Gazelle, and has accordingly ramped up production.

In the fourth quarter, footwear sales increased by 8%, while apparel sales declined by 13%.

“Under Bjorn Gulden’s leadership, Adidas has been making positive strides,” remarked Thomas Joekel, a portfolio manager at Union Investment. “Brand perception is improving, resulting in fewer products needing to be discounted.” Last month, Adidas set conservative expectations for its remaining Yeezy products, indicating they would be sold “at least at cost.”

The latest Yeezy release was launched on Feb. 26, with demand for the shoes being uncertain and not as high as initially expected following the partnership termination.