Adidas Says The Company Could Take A $1 Billion Financial Hit After Parting Ways With Kanye West

Adidas says the sportswear giant could face a $1 billion sales loss after cutting ties with Kanye West.

On Friday, shares of Adidas fell by 11% after the German-based sports apparel maker revealed they’re struggling to sell unsold stocks of Yeezy products. However, just a day prior, Adidas said they were reassessing their financial strategy but if the company fails to sell the Yeezy products, their operating profit could suffer a loss of more than $533 million.

Adidas also says they are expecting sales to decline even more by the end of the year. In addition, the company added its financial guidance for 2023  “accounts for the significant adverse impact from not selling the existing stock” of Yeezy shoes and clothing.

“The numbers speak for themselves. We are currently not performing the way we should,” Adidas CEO Bjørn Gulden said in a statement. Gulden added that he promises a “year of transition” to make the sportswear company profitable again.

Shortly after Adidas parted ways with West, the company said they would try to sell the branded products with the help of removing the Yeezy name from its items. They also said that selling the Yeezy sneakers under its own branding could potentially save the company $300 million in royalty payments and marketing fees.

Last year, Adidas terminated its partnership with West due to his anti-semantic statements. The company said it “does not tolerate antisemitism and any other sort of hate speech” and explained the fashion designer’s comments were “unacceptable, hateful and dangerous.” They added that West’s statements ” violated the company’s “values of diversity and inclusion, mutual respect and fairness.”

Beyonce’s Ivy Park brand was not named a potential issue in the matter. However, the Wall Street Journal previously reported that the streetwear’s sales fell 50% last year to an estimated $40 million. Nevertheless, Adidas says their partnership with Ivy Park is “strong and successful.”