Adidas boss pledges turnaround after Yeezy split

Adidas has not said how much the Yeezy brand has made since its first deal with Ye, formerly known as Kanye West.

Adidas will slash its 2022 dividend, the sporstwear maker said, warning a split with rapper and fashion designer Ye could push it to its first annual loss in three decades this year.

Chief executive Bjorn Gulden, who took up the reins in January, pledged to rebuild the bruised brand after dealing with the fallout from ending Adidas' partnership with Ye, which yielded the lucrative Yeezy footwear line.

Adidas has not said how much the Yeezy brand has made since its first deal with Ye, formerly known as Kanye West. The company needs to refocus on its core business and faces a "transition" year before returning to profit in 2024, and will return to its sports-based roots, Mr Gulden said.

"You will see us investing in more sports...because that is the DNA of this company," he told reporters. The company cut ties with Ye in October following a series of anti-semitic comments he made on social media and in interviews which also prompted Twitter and Instagram to restrict his accounts on their platforms.

Mr Gulden said Adidas is still deciding what to do with its stock of unsold Yeezy footwear. Burning the shoes poses a sustainability issue, he said, while giving them away to charity is complicated due to their resale value, which has surged since the split.

A pair of Yeezy 350 Zebra shoes is now selling for between $340 (€323) and $360, compared to around $260 four months ago, according to John Mocadlo, CEO of US reseller Impossible Kicks.

One option could be for Adidas to donate proceeds from the sale of repurposed Yeezy stock to charity, Mr Gulden said. The split cost Adidas €600m in sales in the fourth quarter of 2022, and Yeezy shoes would have brought in an estimated $1.2bn in revenue this year.

Mr Gulden said ending Yeezy - a decision that predated his taking the helm - was the right thing to do but added that it was "very sad" and that it would take time for Adidas to build a new brand that is as influential.

Overall, Mr Gulden said Adidas needs to reduce inventory levels and do less discounting. Inventories came in at just under €6bn at the end of December, including €400m of Yeezy products.

The end of pandemic lockdowns in China is expected to drive sales up across the major retail brands for whom China is a key market, but for Adidas that boost will likely be wiped out by the impact of the Yeezy split. 

Reuters