7.3 C
New York
Saturday, March 25, 2023

Adidas Cuts Outlook For 2022 After Kanye West Split

Adidas cut its 2022 outlook further on Wednesday as it weighed the impact of its split from Ye, the rapper formerly known as Kanye West, while sluggish demand in China continued to weigh on sales.

Adidas now expects its currency-neutral revenue to grow at a low-single-digit rate in 2022, down from a previously forecast mid-single-digit rate. It expects an operating margin of around 2.5 percent instead of 4 percent.

Shares of Adidas fell 2.8 percent after the results announcement, with Credit Suisse analysts looking at the company’s future challenges as elevated inventory, deteriorating brand momentum, increased competition in China, long delivery times on sporting goods and the loss of the Yeezy brand from Ye.

These challenges will fall to new CEO Bjorn Gulden to address. Gulden is set to replace Kasper Rorsted from January 1 after leaving rival Puma.

Adidas reported a 27 percent drop in business-to-business revenue in the Chinese market in the third quarter, also pointing to lingering challenges posed by COVID restrictions. It posted net income from continuing operations of 66 million euros ($66.4 million), downgrading its preliminary figure by almost two-thirds after the end of the partnership with Ye.

Termination of the partnership is expected to cut annual earnings in half, the company previously said, with net income from continuing operations of around €250m now expected this year.

The one-time costs are expected to amount to almost 300 million euros, mainly related to Adidas’ departure from Russia, as well as negative tax effects related to Ye’s separation, the company said, adding that this would be fully offset by a similarly sized positive fiscal effect in the fourth quarter.

By Raquel More; Editors: Miranda Murray and Bradley Perrett

Learn more:

Adidas ends partnership with Yeezy

The German sportswear brand has responded to mounting public and internal pressure to sever its lucrative celebrity ties following a spate of anti-Semitic comments.

Related Articles


Please enter your comment!
Please enter your name here

Latest Articles