Adidas said on Wednesday that it was still considering what to do with its big stock of Yeezy products after ending its collaboration with the contentious rapper.
The company estimated that not selling the West-related clothing and footwear would result in a revenue loss of $1.3 billion (1.2 billion euros).
Following a slew of anti-Semitic rants from West, now officially known as Ye, Adidas ended its partnership with him in October.
As a result, the company stopped making the wildly popular Yeezy line that it had created with West.
The company would have to write off the whole inventory “should the company irrevocably decide not to repurpose any of the existing Yeezy merchandise moving ahead,” according to the statement.
According to the firm, this would reduce operational earnings by an additional 500 million euros in 2023.
Adidas warned that it would have an operational loss of 700 million euros in 2023 in addition to one-time expenses estimated to total 200 million euros associated with a business strategic review.
The organization will utilize 2023 as a “transition year to construct the framework for 2024 and 2025,” according to Bjorn Gulden, the incoming group CEO. “We need to cut back on discounts and stocks. In 2024, we may begin to construct a successful company once more,” he stated.
The European Football Championships and the Olympic Games were both scheduled for the next year, which was building up to be a significant one for sporting goods manufacturers.
Adidas also reported a sharp 83 percent decline in net profit to 254 million euros in 2022 on Wednesday, matching preliminary figures revealed in February.
The company was also dealing with “elevated recession risks in Europe and North America as well as uncertainty surrounding the recovery in Greater China” in addition to its problems with the Yeezy line.
The measures to dramatically lower high inventory levels would also have an influence on the company’s ability to grow its revenue, it was said.