Is Adidas in its comeback season? It’s a bit hard to say with the CEO forecasting a “bumpy year with disappointing numbers” ahead.
Following the Kanye West controversy over his antisemitic comments and resulting aftermath, 2022 was a tumultuous year for the sportswear giant. The company cut ties with the rapper because of his anti-Jewish remarks.
“adidas does not tolerate antisemitism and any other sort of hate speech,” the company shared in a statement at the time. “Ye’s recent comments and actions have been unacceptable, hateful, and dangerous, and they violate the company’s values of diversity and inclusion, mutual respect, and fairness.”
As previously shared by AfroTech, the severed partnership resulted in a net loss of $540 million in its final 2022 quarter due to West’s unsold Yeezy products. What’s more, Adidas hadn’t had an operating loss across a full year on that level for over three decades.
In March 2023, the company shared that it was expecting an operating loss of $738 million in 2023 and CEO Bjorn Gulden recognized this year as “a transition year.”
Based on a report, it appears that the change in direction has been in motion.
On May 5, Reuters reported Adidas had seen “better-than-expected quarterly results” with an increase of 8% in shares, as of the report — marking its highest level since August 2022. The leap comes after sales were predicted to drop 4% but only dropped 1%.
“Adidas is managing investors’ expectations,” said Mamta Valechha, equity research analyst at Quilter Cheviot, according to the outlet.
“They are going in the right direction – China is recovering, inventories are still too high but at least sequentially down,” she added.
The outlet details that the sell-through rate increased by 12% in the first quarter in Adidas’ own stores and wholesalers in China.
“For the first time… (in) the last two and a half years, we are actually optimistic that the numbers will turn from red to green,” Gulden said.
While the jump in shares the other day was a win for Adidas, they are experiencing some losses.
According to BBC, the company said sales in North America had decreased by 20% due to cutting ties with Kanye West and Gulden admitted that it’s “of course hurting us.”
He previously shared that 2024 will be when he expects to “build a profitable business again.” Additionally, Reuters notes that it’s crucial for Adidas to clear out its inventory by this year.