The German sporting goods manufacturer Adidas had a net attributable profit of 45 million euros up to June, a 94.2% lower than in the same period of 2022, due to the costs of the end of the collaboration with the rapper Kanye West.
Adidas reported today that lBilling worsened in the same period to 10.617 million euros (-2.6%), also due to the depreciation of the euro, while operating profit fell to 236 million euros (-71.5% than a year earlier).
The company, which began collaborating with West in 2013 in the design and sale of “Yeezy” sneakers, the rapper’s brand, said that the interruption of this business – at the end of October 2022 due to racist and anti-Semitic statements by the rapper – represented a year-on-year ballast in the first half of 400 million euros because it accounted for about 8% of Adidas’ annual sales.
However, in the second quarter the result improved due to the recovery in China and the first sales of “Yeezy” inventory, that had a positive effect of 400 million euros in that period.
In the first quarter Adidas did not obtain income from this brand so that the company’s income with “Yeezy” was 400 million euros until June (800 million euros a year earlier) and had a positive effect in the result of 150 million euros in the first semester.
Adidas operating profit margin fell in the first semester to 2.2% (7.6% a year earlier).
Higher costs in the supply chain had a negative effect on the margin, exchange rateshigher inventory allocations and spending to promote products.
In addition, Adidas faced a extraordinary of 180 million euros for the costs of reviewing their strategy and donations.
Billing fell in the second quarter to 5,343 million euros (-4.5%) and operating profit decreased to 176 million euros (-55%), reflecting an operating margin of 3.3% (7% last year).
After the first sales of “Yeezy” inventory, Adidas is more optimistic about the whole year and forecasts a mid-single-digit drop in billing, compared to the previous forecast of a higher single-digit loss.
Photo: EFE file
Adidas also forecasts balanced operating profit discounted the extraordinary effects related to the brand “Yeezy” and the strategic review that applies.
In addition, expects losses of 400 million euros of inventory of the “Yeezy” brand (previously 500 million euros) and costs for the strategic review of 200 million euros (unchanged).
That is why Adidas predicts a operating loss of 450 million euros in 2023, compared to a reduction of 700 million euros that he had previously calculated.
On August 2 began the second sale of “Yeezy” inventory through its own e-commerce channel, digital platforms and selected wholesale partners.
Should the sales be successful, they could further improve the result of Adidas.
2023-08-03 14:13:17
