Adidas Posts First Loss in Over 30 Years After Cutting Ties With Kanye West

Adidas, the renowned German sportswear giant, has reported a net loss for 2023, marking its first such loss in over three decades.

The company has also signaled that it anticipates struggles within the North American market to persist into 2024. The loss for the year stood at 75 million euros, attributed to shareholders, with the total revenue seeing a 5% decline, amounting to approximately 21.5 billion euros. The fourth quarter alone saw a significant loss of 379 million euros.

The downturn in earnings is largely attributed to decreased demand for apparel and sportswear in the U.S., coupled with overstocked stores, which have continued to impact sales negatively.

Adidas CEO Bjørn Gulden reflected on the year’s performance in a press release for the fourth quarter.

“Although by far not good enough, 2023 ended better than what I had expected at the beginning of the year,” Gulden said. “Despite losing a lot of Yeezy revenue and a very conservative sell-in strategy, we managed to have flat revenues. We expected to have a substantial negative operating result, but achieved an operating profit of €268 million. With a very disciplined go-to-market and buying process, we reduced our inventories by almost €1.5 billion. With the exception of the US, we now have healthy inventories everywhere.”

The company’s North American performance particularly suffered due to a dispute with Kanye West, leading to the dropping of his shoe brand Yeezy by Adidas in October 2022 after the rapper several controversial comments concerning the Jews—an ironic circumstance, given that Adidas’s namesake founder Adolf Dassler was a card-carrying member of the National Socialist party during the Third Reich.

This discontinuation resulted in a loss of approximately 500 million euros compared to the previous year. Despite resuming sales later in the year to reduce inventory, currency-neutral sales in North America fell by 16%.

Conversely, sales showed positive growth in other regions, with an 8% increase in Greater China, a 7% rise in Asia-Pacific, and a 22% surge in Latin American sales. For 2024, Adidas expects revenue growth in every market except North America, attributing the anticipated stagnation to ongoing efforts to sell off excess inventory amid consumer financial struggles.

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