Adidas AG has raised its guidance for the second time in three months, driven by the successful sale of Yeezy sneakers stemming from its terminated partnership with rapper and designer Ye.
The German sportswear company now anticipates an operating loss of approximately €100 million ($106 million) in 2023, as stated in a recent announcement. This is a significant improvement from the previously forecasted €450 million loss in July, which itself was an improvement over the initial warning of a potential €700 million operating loss if all existing Yeezy inventory had to be written off.
Adidas’ American depositary receipts saw a 3.1% increase in late trading on Tuesday.
Since May, Adidas has executed two successful Yeezy product releases and is poised to see further sales boosts from its remaining inventory as the holiday shopping season approaches. However, these future sales are expected to have a somewhat smaller positive impact on earnings compared to the initial May and June releases, which generated approximately €400 million.
Adidas terminated its partnership with Ye (formerly known as Kanye West) in October, following a series of antisemitic remarks. This left approximately €1.2 billion worth of Yeezy sneakers in limbo.
In May, Adidas made the decision to sell its stockpile of unsold Yeezy shoes from the defunct partnership and pledged to donate a significant portion of the proceeds to charities fighting discrimination and hate speech.
The potential write-off for the remaining Yeezy inventory has now decreased to around €300 million from a prior estimate of €400 million, according to Adidas.
Adidas is looking to regain momentum under the leadership of CEO Bjorn Gulden, who took over in January. The company has been facing challenges in growing its North American market, in part due to a substantial inventory of unsold footwear and apparel in the region.
Adidas, however, appears to be on the path to recovery, with a positive trajectory in China and strong global demand for its Terrace line of sneakers, including classics like the Samba and Gazelle.
