Adidas says split from Yeezy will cost it $1.3 billion
The rapper formerly known as Kanye West told the world last year that he lost $1 billion after severing a partnership with Adidas. Now it turns out Adidas stands to lose even more.
The German sportswear brand expects to lose $1.3 billion in sales this year because Yeezy clothes and shoes will not be available, the company said Thursday. A lack of Yeezy products will also reduce operating profit by $534 million, with the company projected to break even this year, Adidas said.
"The numbers speak for themselves. We are currently not performing the way we should," CEO Bjørn Gulden said in a statement. "2023 will be a year of transition to set the base to again be a growing and profitable company."
The warning about revenue loss sent Adidas' stock price for a tumble Friday, falling 11.5% to $138.50 a share. Its stock has fallen 45% since the beginning of this year.
Adidas ended its clothing-and-shoe deal with West, who now goes by Ye, last October after the rapper made antisemitic remarks on social media. Adidas faced pressure to cut ties with Ye, with celebrities and others online urging the company to act.
Yeezy accounted for about 10% of Adidas' annual revenue last year and terminating the deal put a $246 million hit in its bottom line. But losing the Yeezy products will not doom the company entirely, analysts told CBS MoneyWatch in October.
"We need to put the pieces back together again, but I am convinced that over time we will make Adidas shine again," Gulden said. "But we need some time."
Adidas' deal with the Chicago native officially started in 2016, with the company at the time calling it "the most significant partnership ever created between an athletic brand and a non-athlete."
Ye first said he wanted to leave Adidas last June, when he accused the company of launching a shopping event called Yeezy without his knowledge. He will continue to own Yeezy, which he launched in 2016, as well as control trademarks for the brand.
Ye's controversial remarks also led to break-ups from other major brands. He ended a deal with Gap last year and the company soon after removed Yeezy Gap products from its stores and website.