(qlmbusinessnews.com Fri. 19th April, 2024) London, UK —
“Resilient Adidas: €700m Profit Forecast Signals Recovery Post Kanye West Partnership”
Adidas, the German sportswear giant, has emerged resilient from its tumultuous partnership with rapper Kanye West, projecting profits of €700m (£598m) for 2024.
In a strategic move, Adidas announced in February its intention to offload its remaining Yeezy trainers from the collaboration with West at cost price, signaling a shift in focus.
Tuesday's optimistic outlook from Adidas follows a challenging period, marked by the company's first losses in 30 years. Known for iconic footwear lines like Samba, Gazelle, and Campus, Adidas credits its revised profit forecast to a stronger-than-anticipated performance in the first quarter of the year.
The company reported a quarterly operating profit of €336m, a significant increase from €60m during the same period last year when it faced repercussions from the split with West.
Additionally, Adidas disclosed that it generated €150m in revenue from Yeezy product sales during the quarter, resulting in a profit of approximately €50m. It anticipates selling the remaining Yeezy stock for around €200m later this year, albeit without additional profit.
Despite parting ways with West in November 2022 following his antisemitic remarks on social media, Adidas maintains a diverse and loyal customer base, including high-profile figures like British Prime Minister Rishi Sunak.
Last week, Sunak's longstanding patronage of Adidas Samba shoes made headlines, prompting him to issue a “fulsome” apology on LBC radio. Sunak, while expressing regret for any potential reputational impact, affirmed his enduring affinity for the Adidas brand.
While Adidas expects its profits to be affected by the Yeezy saga, the company also acknowledges external factors such as the devaluation of the Argentine peso in late 2023. This devaluation has repercussions for Adidas, which has a longstanding association with Argentina's national football team, manufacturing their shirts.
The impact of currency devaluation extends beyond Adidas, affecting rival sportswear firm Puma, particularly in the Latin American market, which represents its largest and fastest-growing region
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