Adidas’ Bright Future: Moving On from Kanye West Agreement
Adidas has emerged from its challenging partnership with rapper Kanye West and is optimistic about its financial prospects for 2024, expecting profits of €700 million (£598 million). In February, the German sportswear giant announced plans to sell its remaining Yeezy trainers, a product of its collaboration with West, at cost price or above.
This positive outlook from Adidas follows a month after the company reported its first losses in 30 years. Notably, Adidas is known for its iconic shoe models like Samba, Gazelle, and Campus.
The company attributes its revised profit forecast to a stronger-than-expected performance in the first quarter of the year. Quarterly operating profit surged to €336 million, a significant increase from €60 million the previous year, which was impacted by the fallout from the West partnership.
In addition to its core products, Adidas reported selling €150 million worth of Yeezy products in the quarter, generating a profit of approximately €50 million. It anticipates selling the remaining Yeezy stock for around €200 million later in the year, without expecting further profit. Notably, Adidas pledged to donate a portion of the proceeds from Yeezy sales to charities combating hate.
Adidas ended its partnership with Kanye West in November 2022 due to antisemitic remarks he made on social media. Despite the split, Adidas maintains a diverse fan base, including high-profile customers.
The brand faced recent scrutiny when it was revealed that British Prime Minister Rishi Sunak had been a longtime customer, particularly of its Samba brand. Sunak issued a public apology on LBC radio, acknowledging potential concerns about his association with the brand but affirming his loyalty to Adidas.
While Adidas remains optimistic about its financial outlook, it acknowledges that the Yeezy affair will impact its profits. Additionally, the devaluation of the Argentine peso at the end of 2023 has affected Adidas, as the company manufactures shirts for Argentina’s national football team. This currency devaluation also impacted rival sportswear firm Puma, which highlighted Argentina’s significance as its largest and fastest-growing market.
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