Adidas’ Droping Yeezy will cost it $1.3 billion

Adidas dumps Kanye West after anti-Semitic remarks

Adidas dumps Kanye West after anti-Semitic remarks 02:12

The rapper, formerly known as Kanye West, told the world last year that he lost $1 billion after breaking a partnership with Adidas. Now it turns out that Adidas will lose even more.

The German sportswear brand expects to lose $1.3 billion in sales this year because Yeezy apparel and footwear will be unavailable, the company announced on Thursday. A shortage of Yeezy products will also reduce operating profit by $534 million, with the company expected to break even this year, Adidas said.

“The numbers speak for themselves. We are not currently operating as we should,” CEO Bjørn Gulden said in a statement. “2023 will be a year of transition to lay the foundation to be a growing and profitable company again.”

The warning of falling sales sent Adidas’ share price plummeting on Friday, falling 11.5% to $138.50 a share. The stock is down 45% since the beginning of this year.

Adidas ended its clothing and footwear deal with West, now called Ye, last October after the rapper made anti-Semitic remarks on social media. Adidas faced pressure to sever ties with Ye, with celebrities and other online acquaintances urging the company to act.

Yeezy accounted for about 10% of Adidas’ annual sales last year, and the deal’s termination resulted in a $246 million bottom line profit. But the loss of Yeezy products won’t shut down the company entirely, analysts told CBS MoneyWatch in October.

“We have to put the pieces back together, but I’m convinced that over time we will make Adidas shine again,” said Gulden. “But we need some time.”

Adidas’ deal with the Chicago native officially began in 2016, with the company describing it at the time as “the most significant partnership ever forged 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, and control the brand’s tokens.

Yes’s controversial comments also led to splits from other major brands. He ended a deal with Gap last year, and the company shortly thereafter removed Yeezy Gap products from its stores and website.

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Christopher J Brooks

Khristopher J. Brooks is a reporter for CBS MoneyWatch covering business, consumer and financial stories ranging from economic inequality and housing issues to bankruptcy and sports deals.

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