Adidas has announced that the sportswear company will cut its 2022 dividend as it faces the possibility of its first annual loss in three decades, after ending its partnership with rapper and fashion designer, Ye, also known as Kanye West.
The company has pledged to rebuild it’s core business after the split, which resulted in the end of the lucrative Yeezy sneaker line, estimated to have accounted for up to 7per cent of Adidas' total sales in its best years. The split cost Adidas $632m in sales in Q4 2022, and the Yeezy line would have generated an estimated $1.2bn in revenue this year.
Adidas has not yet said what it will do with unsold Yeezy stock, while burning the shoes raises sustainability issues, giving them to charity is complicated due to their resale value. One option could be for Adidas to donate the proceeds from the sale of repurposed Yeezy stock to charity.
Adidas needs to reduce inventory levels and do less discounting. Inventories came in at just under €6bn at the end of December, up 49 per cent from the previous year, including €400m of Yeezy products.
The company forecast 2023 underlying operating profit at roughly break-even when taking into account the $500m loss from not selling existing Yeezy stock. The company is expected to return to its sports-based roots.
