Jovani Hernandez Today, adidas published its financial outlook for 2023. In it, the German sportswear behemoth detailed some of its big bets for the remainder of the year, as well as the impact of its breakup with Kanye West and his YEEZY label.
Reports in late December 2022 found that the Three Stripes was sitting on over $500 million worth of adidas YEEZY products. According to the brand’s financial guidance, not repurposing and selling existing stock “would lower revenues by around € 1.2 billion and operating profit by around € 500 million [approximately $533 million] this year.” If the company decides to disregard all of the YEEZY product is currently own, it expects to suffer an operating loss of $746 million by the end of 2023.
Away from its falling out with Ye, adidas has also suffered financially from its partnership with Beyoncé’s activewear brand, IVY PARK.
Since early 2020, the IVY PARK x adidas line has launched at least a dozen footwear, apparel, and accessories capsules that’ve rallied Beyoncé’s fanbase to the adidas CONFIRMED app on drop dates. Yet, revenue from the line fell more than 50% in 2022, according to the Wall Street Journal. The company had projected that the IVY PARK business would pull in $250 million in 2022; it did $40 million in sales.
“The numbers speak for themselves,” shared adidas CEO Bjørn Gulden in an official press release from the brand. “We are currently not performing the way we should. 2023 will be a year of transition to set the base to again be a growing and profitable company. We will put full focus on the consumer, our athletes, our retail partners and our adidas employees. Together we will work on creating brand heat, improve our product engine, better serve our distribution and assure that adidas is a great and fun place to work. adidas has all the ingredients to be successful: A great brand, great people, fantastic partners and a global infrastructure second to none. We need to put the pieces back together again, but I am convinced that over time we will make adidas shine again. But we need some time.”
Following the report being published, shares of adidas dipped by 12.6% as investors worry about the company’s economic standing.
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