Adidas is at risk of losing around 1.2 billion euros ($1.3 billion) in revenue in 2023 if they are unable to sell existing Yeezy stock.
The German sportswear company said it was assessing what to do with the inventory, adding it has already accounted for the “significant adverse impact” of not selling the products.
This comes after the international brand in October cut ties with the rapper Ye, formerly known as Kanye West following a series of antisemitic comments he had made.
It is projected that operating profit would drop by around 500 million euros if the company fails to shift the products, and Adidas expects sales to decline at a high single-digit rate in 2023. Adidas could opt to write off its remaining Yeezy products, CNBC said.
The company’s shares sank by 11 per cent on Friday morning as traders reacted to the announcements.
Adidas also forecast a one-off cost of up to 200 million euros, leaving it Adidas’ worst-case scenario for the year as a 700-million-euro loss for 2023.
“The numbers speak for themselves. We are currently not performing the way we should,” Adidas CEO Bjørn Gulden said in a press release.
Adidas’ revenues increased by 1% in 2022, based on unaudited numbers, while operating profit dropped from almost 2 billion euros in 2021, to 669 million euros in 2022.
