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Adidas could suffer further losses amid the struggle to sell its leftover YEEZY products.
Adidas reported a net loss of $540 million USD in the fourth quarter of 2022.
The news comes following the termination of its partnership with the disgraced rapper Kanye West popularly known as 'Ye'.
The company’s fourth-quarter losses, which can also be blamed on rising supply-chain costs and China’s lowered revenue, is a stark contrast from their reported figures in 2021 Q4, which saw a profit of approximately $224 million USD.
Adidas braced up for further losses
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The German manufacturing company is also anticipating further losses, with forecasts predicting an estimated $527 million USD decline in earnings, if the sportswear giants decide to abandon repurposing its still-stocked YEEZY products this year.
Meanwhile, Q4 net sales measured roughly $5.5 billion USD, marking just a 1.3% increase from the same quarter in 2021.
The figure was held back by lost revenue, tallying approximately $632 million USD, that resulted from the stoppage of adidas’ Ye partnership, HypeBeast reports.
“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.”
Adidas reportedly agreed a deal with Kanye West to sell off Yeezys
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Last month, new reports emerged saying adidas had reached a new agreement with Ye to sell $500 million USD worth of its remaining YEEZY sneakers.
The deal was expected to see the company sell select non-branded YEEZY products, in an effort to avoid a previously estimated $1.3 billion USD loss in unsold merchandise, with no new designs set to be produced.
However, adidas has not confirmed this information.
Bloomberg reports that Gulden is toying with the idea of selling YEEZY products and donating the profits to charity.
The company has also not yet made an official statement regarding its intended course of action.
Adidas had ended its partnership with Kanye West in 2022, following his anti-semitic comments.
The October 25 split saw a halt in the production of all Yeezy products and an end to royalty payments.
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