weighs the break with the rapper-designer Kanye West-Corriere.it
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The breaking of the contract with Kanye West weighed on the accounts of Adidas which closed 2022 with a profit from continuing operations of 254 million, down 83% compared to the previous year closed with profits of 1.5 billion, after having recorded a loss of 482 million euros in the fourth quarter of the year. The red in the quarter, explained the group, was affected by the halving of revenues from China and a negative impact of 600 million linked to the accumulation of stocks of Yeezy sneakers after the decision to cut ties with Kanye West, with whom Adidas produced them , due to some anti-Semitic tweets by the rapper that prompted Adidas to end commercial relations. Now for the sports brand it is facing important losses and a complicated warehouse to dispose of
Operating loss of 700 million in 2023
In any case, revenues for the 12 months grew by 6% to 22.5 billion (+1% net of the exchange rate effect), held back by China (-36%), the only geographical area with a minus sign, while in the last quarter recorded a decrease of 1% at constant exchange rates. The board, confirming that it expects an operating loss of 700 million euros in 2023 as a result of the decision to withdraw Yeezy shoes from the market, has decided to cut the dividend to 0.7 euros per share, compared to 3.3 euros last year year. Between October and December alone, the German company recorded a loss of 512 million euros, compared with a net profit of 202 million in the fourth quarter of 2021, while turnover was 5.205 billion, up by 1.3 %.
The new CEO
2023 will be a transition year to build the foundation for 2024 and 2025, new CEO Bjrn Gulden said. We need to reduce stock and lower discounts. Then we can start building a profitable business again in 2024. Adidas – he concluded – has all the ingredients to be successful.
Market reactions
Adidas has launched four profit warnings in less than six months and had been looking for a drastic change under the new leadership of Bjorn Gulden and with the new CEO declaring 2023 to be a year of transition, a time frame that also comes to be described as uncertain, conditioned by the high risks of recession in Europe and North America and with the uncertainty of the Chinese recovery. A situation which, on the other hand, is not taken for granted by the stock markets. On the evening of Thursday 9 February, the company had surprised the market by publishing the numbers for 2022 with the reaction of the stock on the Frankfurt Stock Exchange which closed down by almost 11%. Today does not offer great hopes but invites investors to be confident but above all patient, with the dividend being cut for the entire year by 79%. Unfortunately, ethics and morals, aspects that should be more appreciated, are instead absent on Wall Street where companies must grow or die to remain competitive and sustainable in the long term, comments Gabriel Debach, Italian market analyst of eToro to Adidas results downhill. Meanwhile, the market is selling and causing the stock to fall above 2%.
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