Adidas, the largest European manufacturer of sports equipment, will pay fewer dividends in 2022. The German sports brand issued a profit warning a few weeks ago due to the loss of sales of Yeezy products.
After a series of anti-Semitic statements by Kanye West, the German sports brand broke off cooperation with the American rapper, who now calls himself Ye. Adidas, therefore, has a large stock of unsold items from Ye’s Yeezy brand.
The collaboration that Adidas and the artist started in 2015 has for years been one of the most lucrative combinations of forces in the sports fashion industry. However, now that this has ended, Adidas is forced to reduce the dividend to 0.70 euros per share from 3.30 euros a year earlier. The lower dividend follows the sharp drop in profit that Adidas announced last month when it presented its preliminary results.
In addition to the negative impact of the termination of the partnership with West, Adidas also had to deal with high inflation and problems in China in 2022. As a result, the company’s profit plummeted to 254 million euros last year from almost 1.5 billion euros in 2021. There was a loss of 482 million euros in the fourth quarter, after a profit of 123 million euros in the last quarter of 2021.
Due to the end of the Yeezy collaboration, Adidas lost about 600 million euros in turnover. The Yeezy issue will also continue to weigh on the company’s results in the current year. If the large stock of Yeezy items remains unsold, the group must write off 500 million euros.
The management of Adidas, therefore, reiterated the forecasts issued in February. This considers an operating loss for the whole of 2023 of up to 700 million euros. That loss also includes one-off reorganization costs of 200 million euros. The new CEO, Bjørn Gulden, who switched from competitor Puma to Adidas earlier this year, called 2023 a transition year, laying the foundations for a return to profitability in 2024.
