Kanye West at an Adidas partnership announcement event on June 28, 2016 in Hollywood, California.
Adidas on Wednesday cut its full-year guidance after the German sportswear giant ended its partnership with Kanye West’s Yeezy brand.
Company end relationship with Yeformerly known as Kanye West, on October 25 after the musician unleashed a series of insults and protests on social media and in interviews.
Adidas now forecasts net operating income of around 250 million euros ($251.56 million), down from a target of around 500 million euros set on October 20. The company now expects it. currency-neutral revenue for low single-digit growth in 2022, with current gross margins expected to be around 47% for the year.
Adidas reported a 4% year-over-year increase in currency-neutral sales, with double-digit growth in e-commerce in EMEA, North America and Latin America. The company said gross margins fell one percentage point to 49.1% due to “higher supply chain costs, higher discounts and unfavorable market mix”.
Operating profit came in at 564 million euros, while net income from continuing operations was 66 million euros, down from 479 million euros a year ago, “negatively affected by a number of one-time expenses totaling nearly 300 million in value as well as unusual tax impacts in Q3,,” said Adidas.
“This amount differs from the preliminary figure published on October 20, 2022, due to the negative tax effect in the third quarter related to the company’s decision to end its partnership with adidas Yeezy. same in Q4,” said Adidas.
The company also revealed that it reduced its full-year guidance on October 20 due to “worsening traffic trends in Greater China, higher clearance operations to reduce rising inventory levels, as well as total costs.” a one-time fee of about 500 million euros.”
“The market environment changed in early September as consumer demand in Western markets slowed and traffic trends in China continued to deteriorate,” Adidas CFO Harm Ohlmeyer said in a statement. Father.
“As a result, we see significant inventory build-up across the industry, leading to higher promotional activity for the rest of the year, which will increasingly weigh on our earnings. “
Ohlmeyer said the company has been “encouraged” by “remarkable” enthusiasm for building the FIFA World Cup in Qatar later this month.