Adidas breakup with rapper Ye, lost Yeezy sales hit earnings

FILE – A sign is displayed in front of an Adidas retail store in Paramus, N.J., Oct. 25, 2022. Adidas is facing a class-action lawsuit from investors that was filed Friday, April 28, 2023, alleging the company knew about offensive remarks and harmful behavior from Ye, the rapper formerly known as Kanye West, years before ending its partnership with him. (AP Photo/Seth Wenig, File)

FRANKFURT – Adidas saw operating earnings dwindle in the first three months of the year as the German sportswear company’s breakup with the rapper formerly known as Kanye West and his popular Yeezy shoe brand cost it 400 million euros ($441 million) in lost sales.

Profit was down to 60 million euros from 437 million euros in the same quarter a year ago, while profit margin shrank to a bare 1.1%. Net sales declined 1%, to 5.27 billion euros, and would have risen 9% with the Yeezy line, the company said Friday.

Losing the Yeezy brand is “of course hurting us,” new CEO Bjorn Gulden said in a statement, which didn’t explain what Adidas would do with 1.2 billion euros worth of unsold Yeezy shoes after the company cut ties with the rapper now known as Ye in October.

The breakup, which followed Ye’s antisemitic comments on social media and in interviews, will reduce earnings by 500 million euros in the coming year, the Herzogenaurach-based company has said.

Gulden did say the results for the Herzogenaurach-based company were “a little better than we had expected” as the company seeks to restart growth and move beyond the breakup with Ye.

Copyright 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

Source link