Frankfurt, Germany– Adidas reported Friday a hefty first-quarter loss as its split with the controversial US rapper Kanye West dragged down the German sportswear giant’s bottom line.
The company booked a net loss of $43 million from January to March, compared to a profit of 482 million euros in the period a year earlier.
Its operating profit came in at 60 million euros, a fall of more than 85 percent from a year earlier, while sales were almost flat at 5.28 billion euros.
However the company suffered 400 million euros in lost earnings related to ending the production and sale of its highly succesful Yeezy line, designed in collaboration with West.
Adidas halted its tie-up with West — now known as Ye — in October after he made a series of anti-Semitic outbursts.
The company had announced in February that it could suffer an operating loss of as much as 700 million euros this year if decides to write off the value of its entire existing Yeezy inventory.
New Adidas boss Bjorn Gulden said 2023 would be a “transition year”.
“We just need some time. 2023 will be a bumpy year with disappointing numbers, where maximising our short-term financial results is not our goal,” he said in a statement.
But he faces myriad challenges in getting the company on a better footing.
As well as the Kanye split, Gulden needs to revive Adidas’s business in the key Chinese market, where it was hit by lengthy Covid lockdowns.
First-quarter sales fell in China and the United States, markets particularly affected by the discontinuation of the Yeezy line.
But there were gains in Latin America and other parts of the Asia-Pacific.