Adidas hurt By Unsold Kanye West Yeezy Sneakers. Adidas has reported a significant operating loss after ending its partnership with Kanye West. The company announced a loss of $540 million in the final quarter of 2022, which was largely attributed to the unsold Yeezy products. This news was reported on AfroTech.
Adidas Faces $540 million Loss Due To Split With Kanye West
Adidas posts a $540 million loss due to unsold Kanye West Yeezy shoes. Adidas experienced a net loss of $540 million in the fourth quarter of last year, which was attributed to several factors.
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The company’s split with rapper Kanye West, who was formerly associated with its popular Yeezy line of shoes, played a role in this loss. Additionally, higher supply costs in China and a decline in revenue contributed to the negative financial result.
The loss could continue as Adidas is forecasting a $527.5 million drop in earnings this year if it decides not to restock the remaining Yeezy products it currently has in stock. Furthermore, the company is expecting an operating loss of $740 million in 2023.
Why Did Kayne West Terminate Endorsement Deal With Adidas?
Because of his anti-Semitic comments in interviews and on social media, musician Kanye West’s endorsement deal with Adidas was terminated in October 2022.
The public pressure on Adidas to end its partnership with the rapper had an impact on their decision to separate. As a result, the company is struggling to find a substitute for its popular Yeezy line, which brought in 15% of its net income
Adidas Experiences Marginal Q4 Sales Growth And Other Losses Faced
Adidas’ net sales in the fourth quarter of the prior year increased marginally by 1.3% to $5.49 billion. But, after opting to stop its collaboration with West, who underwent a legal name change, the corporation suffered a revenue loss of around $633 million.
Price increases were unable to make up for this income loss, and the company also disclosed a roughly 50% decline in sales in China coupled with greater costs for supplies and delivery.
Notwithstanding these difficulties, Adidas ended the year with a net profit of $673 million on total sales of $23.7 billion, a 6% rise in sales. If the company decides not to sell the remaining Yeezy products in stock, it expects its earnings to drop by another 500 million Euros this year.
Adidas To Focus On Profitability In Transitional Year Of 2023
Adidas CEO Bjorn Gulden has stated that 2023 would be a transitional year, with the company focusing on finding new ways to build a profitable business. The company aims to recover its financial position in 2024 after the anticipated challenges of the transitional period have been overcome.
Adidas To Replace Senior Sales and Marketing Executives
Adidas also intends to swap off its senior sales and marketing officials. Roland Oeschel, the 33-year corporate veteran who presently leads global sales, will be replaced by Arthur Hold, who currently manages the Europe, Middle East, and Africa region.
By the end of March, CEO Bjorn Gulden will take over management of their product and marketing initiatives from Brian Grevy, Head of Global Brands.
Kayne’s Response To Breakup With Adidas
Kanye West’s relationship with Adidas and Gap ended after he made controversial comments. However, the rapper saw this as a chance to become independent. According to an interview with Bloomberg, West stated that it was time for him to work on his own without any interference from companies.
He acknowledged that the collaborations he had with Adidas and Gap were profitable for both parties, and they created innovative ideas that would revolutionize the fashion industry.
These ideas included products like the round jacket, foam runner, and slides that changed the shoe industry. West now intends to create a new industry and connect directly with his audience, without any companies acting as intermediaries.
Adidas Suffering Monetary And Personnel Loss
Adidas’ breakup with the rapper formerly known as Kanye West and the inability to sell his popular Yeezy line of shoes reduce earnings at the end of last year, leading to a net loss of $540 million.
The company also said it would be replacing its top sales and marketing executives. Global sales head Roland Auschel will leave the company after 33 years and be succeeded by Arthur Hoeld, now head of the Europe, Middle East, and Africa region.
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