German sportswear group Adidas reported a net loss of 39 million euros in the first quarter of the year, compared with a profit of 482 million euros in the same period a year earlier. This was due to the shock of their breakup with American rapper Kanye West, which caused them to lose €400 million in profit from the completion of the production and sale of their successful line of Yeezy sneakers, designed in collaboration with West. The company terminated its contract with West in October due to his anti-Semitic comments.
Adidas’ operating profit in the first quarter was 60 million euros, an 87% drop from the same period a year earlier, while sales were almost flat at 5.28 billion euros. The company had previously announced that it could suffer an operating loss of up to 700 million euros this year if it decided to write off the value of all its existing Yeezy inventory.
The new director of Adidas, Bjorn Gulden, stated that 2023 will be a “year of transition.” Despite the current losses and challenges, Adidas is making long-term plans and is focused on sustainable growth. The company expects to recover from the pandemic and the fallout from its breakup with Kanye West by the end of the year and hopes to increase its presence online, where demand has grown during the pandemic.