Adidas warns of first annual loss in three decades and cuts dividend after Ye split

Adidas connected Wednesday reported a large fourth-quarter nonaccomplishment and slashed its dividend aft the costly termination of its concern with Kanye West's Yeezy marque successful October.

The German sportswear elephantine posted a fourth-quarter operating nonaccomplishment of 724 cardinal euros ( $763 cardinal ) and a nett nonaccomplishment from continuing operations of 482 cardinal euros. The institution volition urge a dividend of 70 euro cents per stock astatine its May 11 yearly wide meeting, down from 3.30 euros per stock successful 2021.

Currency-neutral revenues declined by 1% successful the 4th fourth arsenic a effect of the termination of the company's Yeezy concern and volition diminution astatine a high-single-digit complaint crossed 2023, the institution said.

Adidas is projecting a full-year operating nonaccomplishment of 700 cardinal euros successful 2023, marking its archetypal yearly nonaccomplishment for 31 years. The estimation includes a deed of 500 cardinal euros successful imaginable Yeezy inventory write-off and 200 cardinal euros successful "one-off costs."

Adidas scrapped its highly lucrative partnership with rapper and manner decorator Ye — formerly known arsenic Kanye West, the look of Yeezy — successful October, aft helium made a bid of antisemitic comments. The institution had antecedently flagged a terrible deed to revenues, if it were incapable to shift its immense remaining banal of unsold Yeezy footwear.

The institution said underlying operating nett volition beryllium "around break-even level," reflecting the nonaccomplishment of 1.2 cardinal euros successful imaginable income from unsold Yeezy stock.

New Adidas CEO Bjørn Gulden, who took implicit from Kasper Rørsted astatine the crook of the year, said successful a connection Wednesday that 2023 volition beryllium a "transition year," arsenic the institution looks to trim inventories and little discounts successful bid to instrumentality to profitability successful 2024.

"Adidas has each the ingredients to beryllium successful, but we request to enactment our absorption backmost connected our core: product, consumers, retail partners, and athletes," Gulden said.

"Motivated radical and a beardown adidas civilization are the astir important factors to physique a unsocial adidas concern exemplary again. A concern exemplary built to absorption connected serving our user done some wholesale and DTC, that balances planetary absorption with section needs, that is accelerated and agile, and of course, ever invests successful sports and civilization to support gathering credibility and marque heat."

Over the full of 2022, currency-neutral revenues were up 1% and grew successful each markets but greater China, with double-digit increases observed successful North America and Latin America. Operating nett came successful astatine 669 cardinal euros, portion nett income from continuing operations was 254 cardinal euros.

"Inventory write-offs and one-off costs relating to the termination of its Yeezy concern successful October person outgo Adidas dearly, resulting successful an operating nonaccomplishment successful the 4th fourth and a diminution successful sales. On apical of that, income successful China fell sharply past twelvemonth amid Beijing's strict lockdown measures," noted Victoria Scholar, caput of concern astatine Interactive Investor.

"Plus Adidas has been dealing with accrued proviso concatenation costs station pandemic and the macroeconomic backdrop which has weakened the user and prompted dense discounting to pull customers."

Adidas shares were down 1.7% during greeting commercialized successful Europe, but stay up much than 11% connected the year.