Adidas lowered its earnings forecast for the year by $250million to account for losses from over his anti-Semitic remarks – but will still sell his sneakers without Yeezy branding.
Adidas owns the design rights for both existing and future colors and eVdeN eVe NAKliyAt versions of the Yeezy line, but not the Yeezy name.
The company said it will continue to sell the sneaker and apparel line, but stripped of the name and branding, reported.
‘Going forward, we will leverage the existing inventory with the exact plans being developed as we speak,’ Adidas finance chief Harm Ohlmeyer said Wednesday.
The German shoe and sportswear maker cut its sales and profit outlook part of its third-quarter earnings statement, even as the company’s chief financial officer said the profitability of the Yeezy shoe collaboration with Ye had been ‘overstated.’
The company slashed its expectations in half for net profit from continuing operations to $252 million this year from about $500 million. That matched its earlier statement that ending the partnership with Ye would cost it $252 million in profits.
The Yeezy brand accounted for up to 15 percent of Adidas’ net income, Morningstar analyst David Swartz said in a note on October 26.
Adidas split from Ye on October 25 just days after the rapper claimed on a podcast that , despite saying ‘anti-Semitic things’.
Adidas on Wednesday lowered its earnings forecast for the year to account for losses from ending its partnership with Kanye West over his anti-Semitic remarks
German sporting goods behemoth Adidas ended its partnership with Kanye West in October amid controversial behavior from the American rapper and designer
Adidas has lowered its revenue forecast for the year to a low single-digit increase from a mid-single-digit increase.
The split with Ye, with production of all Yeezy products halted and royalty payments ended, will leave Adidas searching for another star to help it compete with ever-larger rival Nike.
The company would largely offset the impact of the breakup next year by no longer having to pay royalties and marketing fees for the brand, CFO Harm Ohlmeyer said.
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He was previously expected to hand over next year, but the company announced the quicker change on Tuesday as it named Puma CEO Bjørn Gulden as his replacement.
Adidas faced pressure to split with Ye as other brands did earlier over the rapper´s anti-Semitic comments in interviews and social media, including a Twitter post earlier this month that he would soon go ‘death con 3 on JEWISH PEOPLE,’ an apparent reference to the U.S.
defense readiness condition scale known as DEFCON.
He was suspended from both Twitter and Instagram.
Ohlmeyer also said that the profitability of the Yeezy business had been overstated because its costs only included expenses directly related to the products and not central overhead costs borne by the company.
‘In other words, it does not include any further central cost allocation for sourcing, digital, retail, or any other services that this part of our business has been benefitting from and that were essential for its success,’ Ohlmeyer said.
‘At the same time, EvDen eVe nAkliYat we will save around 300 million euros related to royalties and marketing fees; in combination, this will help us to compensate the majority of the top and bottom line impact in 2023,’ he said.
Shares of the company slid in October after breaking off its relationship with Kanye
The Yeezy brand accounted for up to 15 percent of Adidas’ net income, Morningstar analyst David Swartz said in a note on October 26
A statement posted in the media section of the Adidas website called Kanye West’s comments ‘unacceptable, hateful and dangerous’
The split with Ye, with production of all Yeezy products halted and royalty payments ended, will leave Adidas searching for another star to help it compete with ever-larger rival Nike