German sportswear giant Adidas suffered a net loss in 2023, due to fallout from the end of its collaboration with controversial rapper Kanye West and high inventories in North America, but it expects a recovery progressive this year. The group reported on Wednesday a net loss, group share, of 75 million euros, after a profit of 612 million a year earlier. Overall sales fell 5% to 21.4 billion euros.
Significant excess inventory
He said he had particularly suffered in the United States following the cessation of sales of the Yeezy model, according to a press release. Adidas broke off its collaboration with controversial rapper Kanye West in October 2022, accused of making anti-Semitic comments, and has since sought a solution to sell the thousands of shoes that made their collaboration successful for years.
Two partial sales of shoe stock in 2023 certainly made it possible to collect nearly 750 million euros in revenue. But in comparison, Yeezy sales in 2022 represented 1.2 billion euros. The group also suffered from a drop in sales to wholesalers due to significant excess inventory, particularly in North America, where sales fell 21% in the fourth quarter. Adidas warns that it expects, for this same reason, to a further decline in its sales on this continent this year, of around 5%, according to the press release.
Growth desired for 2024
“It will take time before the situation is reversed,” commented group CEO Bjørn Gulden at a press conference on Wednesday. Adidas is nevertheless targeting overall growth of around 5% in its sales at constant exchange rates in 2024, thanks to 250 million in revenue linked to the expected end of clearance of the rest of Yeezy sneakers.
And after an expected sluggish start at the start of the year, growth will accelerate in the second half of the year, reaching a “double-digit” percentage, according to the group. China and Latin America in particular will see their sales increase by a “double-digit” percentage over the whole year, and by almost 10% in Europe and emerging markets, again excluding currency effects.