German sporting goods giant Adidas is looking ahead to the rest of 2023 as a "transition" year after it cut lucrative ties with rapper Kanye West following his antisemitic rants, company boss Björn Gulden said on Wednesday.
"2023 will be a transition year to build the base for 2024 and 2025," the CEO — who only took over at the beginning of the year — said in a statement.
The company is considering writing off products from the Yeezy range which were produced in collaboration with West, who now goes by the name Ye. Such a move could cost the company up to €500 million ($527 million).
As such, Adidas is expecting to report an operating loss of €700 million this year.
Turnover, profit and dividends all down
"We need to reduce inventories and lower discounts," Gulden said in his statement. "We can then start to build a profitable business again in 2024."
The company had previously bet big on West, a bet which had initially paid off. The Yeezy range brought in €1.2 billion in turnover and €500 million in profits in 2022.
The company's overall profit fell by 83% to €254 million, following a €482 million loss in the fourth quarter, blamed mainly on the outfall of West's antisemitism scandal.
Gulden also pointed to other problems facing the company, such as "elevated recession risks in Europe and North America as well as uncertainty around the recovery in Greater China."
Shareholders are now looking at dividends of around €0.70 per share, down from the €3.30 they received a year ago.
Adidas addresses antisemitism
Adidas is still considering what to do with the millions of Yeezy shoes that it has in storage, with one option being to burn them all.
The breakup with West came in October last year after the rapper began making antisemitic rants on social media and in interviews.
Several other companies also cut ties to West.
Adidas, which has its own Nazi past — its founder joined the Nazi party in the 1930s along with this brother who founded rival shoe and sporting goods company Puma — has attempted to distance itself from the disgraced rapper.