Adidas, the German athletic clothing and footwear firm, said on Wednesday that it had a net loss of 75 million euros ($82 million) in 2023, partly due to its decline in revenues from the Yeezy brand, a partnership it had with the musician Ye (formerly known as Kanye West).
The company terminated its business relationship with Ye in October 2022 over what it said were his antisemitism and other hate speech. At the time, the company said that it anticipated the move would cost 250 million euros in net income that year. Adidas reported a profit of 612 million euros for 2022, according to a statement of results released on Wednesday.
At the start of the year, the company said it was choosing not to write off the entirety of its Yeezy inventory and that it will aim to sell the product at cost. The company described 2023 as a transition year for its business.
“Although by far not good enough, 2023 ended better than what I had expected at the beginning of the year,” Adidas CEO Bjørn Gulden said in a statement. “Despite losing a lot of Yeezy revenue and a very conservative sell-in strategy, we managed to have flat revenues.”
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The company said its revenues, calculated in euros, fell 5 percent to 21.4 billion, partly due to a decline in sales in North American, hurt by the end of the Yeezy partnership, which fell to 5.2 billion euros in 2023 compared to 6.4 billion euros the year before.
“From a market perspective, currency-neutral revenues in North America declined 16 [percent] as this market was particularly affected by the negative Yeezy impact as well as the company’s conservative sell-in strategy to reduce high inventory levels,” the company said.
The company said its outlook for 2024 projects currency-neutral sales will jump in the mid-single digit levels for the year.
“This top-line guidance assumes that adidas will sell the remaining Yeezy inventory at cost, which would result in sales of around 250 million [euros] in 2024. This compares to Yeezy revenues of around 750 million [euros] in 2023,” it said.
The North American market is expected to see sales drop in the mid-single-digit rate for the year, the company said.
“We should see some growth already [in the first quarter], but I expect growth to be stronger in the second half of the year,” Gulden said. “We still have a lot of work to do, but I feel very confident we are on the right track. We will bring adidas back again. Give us some time and we will again say – we got this!”
Newsweek contacted Ye via his Instagram account for comment on Wednesday.
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.