German textile giant Adidas suffered heavy losses in the fourth quarter of 2022 and is looking to rebuild its business model throughout 2023.
Adidas AG recently published its financial report for the fourth quarter of 2022, which revealed big losses held at various levels. For the fourth quarter of last year, the German clothing giant suffered an operating loss of 724 million euros. In addition, the Bavaria-based multinational corporation also suffered a net loss of €482 million from continuing operations.
Following the dismal performance of the fourth quarter of 2022, Adidas cut its dividend and warned of its first annual loss in thirty-one years. Over the past quarter, the apparel powerhouse ended its extremely lucrative partnership with Ye, formerly Kanye West. Last October, the breakdown of the Adidas-Ye deal came after the controversial rap star and business mogul made several anti-Semitic remarks.
Adidas currently projects an operating loss of €700 million for the full year by 2023, including a possible Yeezy inventory write-off of €500 million. In addition, the company’s full-year operating loss estimate also includes a substantial €200 million in “one-off costs.”
Adidas could recommend a dividend of 70 euro cents per share at its next general meeting in May. This development marks a considerable reduction from the 3.30 euros per share that the shoe and clothing designer had in 2021.
For Q4 2022, Adidas also experienced a currency-neutral revenue decline of 1% following the termination of the Yeezy deal. According to the company, its currency-neutral revenue would decline further to a high single-digit rate throughout 2023.
Adidas CEO comments on disappointing Q4 2022 performance
The new CEO of Adidas, Bjørn Gulden, who succeeded Kasper Rørsted at the beginning of the year, spoke about the disappointing figures. Describing 2023 as a “transition year,” Gulden explained that the company is looking to return to profitability next year. According to him, Adidas will try to reduce inventories, as well as discounts, in 2023 on track to reset in 2024. As Gulden said:
“Adidas has all the ingredients to be successful, but we must refocus on our core – product, consumers, retail partners and athletes.”
Gulden also identified the concerted efforts of staff as a vital catalyst in rebuilding Adidas’s business model. In the words of the chief executive himself:
“Motivated people and a strong Adidas culture are the most important factors in rebuilding a unique Adidas business model. A business model built to focus on serving our consumers through wholesalers and DTC, balance global direction with local needs, be fast and agile, and of course always invest in sports and culture to continue building credibility and brand heat”.
discontinued collaboration
Adidas ended its relationship with Ye’s Yeezy brand last October in a show of disapproval of racial abuse. At the time, the apparel giant said that he did not “tolerate anti-Semitism or any other type of hate speech.”
In November, Adidas launched an investigation into Ye’s alleged sexual misconduct towards staff. The investigation came on the heels of a Rolling Stone post that claimed the controversial rapper used sexual antics on employees. These antics included lewd and inappropriate behavior and sexually charged obscene language. Furthermore, the allegations against Ye stated that he showed extreme pornographic material to Adidas/Yeezy staff at meetings.
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Tolu is a Lagos-based blockchain and cryptocurrency enthusiast. He likes to demystify the crypto stories down to the basics so that anyone anywhere can understand them without too much prior knowledge. When he’s not up to his neck in crypto-stories, Tolu likes music, loves to sing, and is an avid movie buff.
