Is Adidas making a comeback? It’s difficult to say, given that the CEO forecasts a “bumpy year with disappointing numbers” ahead.
Following Kanye West‘s anti-Semitic statements and the subsequent fallout, 2022 was a rough year for the sportswear giant. Because of his anti-Jewish statements, the company severed relations with the singer.
“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.”
According to AfroTech, the broken partnership resulted in a $540 million net loss in its last 2022 quarter owing to West’s unsold Yeezy items. Furthermore, Adidas has not had an operational loss of that scale in a complete year in over three decades.
The company said in March 2023 that it expected an operational deficit of $738 million in 2023, and CEO Bjorn Gulden referred to this year as “a transition year.”
According to a study, a change in direction looks to be underway.
Adidas reported “better-than-expected quarterly results” on May 5, with an 8% gain in shares as of the release, striking its highest level since August 2022. The increase comes after sales were expected to fall 4% but instead 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.
According to the outlet, the sell-through rate in Adidas’ own stores and wholesalers in China increased by 12% in the first quarter.
“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 increase in shares the previous day was a success for Adidas, they are also suffering losses.
According to the BBC, the company’s sales in North America have dropped by 20% as a result of the breakup with Kanye West, and Gulden confessed that it is “of course hurting us.”
He previously stated that he hopes to “build a profitable business again” in 2024. According to Reuters, Adidas must wipe all its inventory before the end of the year.