The German sportswear company Adidas on Friday announced a net loss of €30 million ($33 million) from January to March of this year.
The figures, which compare with a profit of €490 million in the same period last year, come seven months after a split from the controversial US rapper Ye, formerly known as Kanye West, that has left €1.2 billions' worth of his popular Yeezy shoes still lying unsold.
Adidas split from Ye over a series of antisemitic outbursts and other offensive comments on social media and in interviews.
Ending the partnership also cost Adidas €600 million in lost sales in the last three months of 2022, contributing to a net loss of €513 million.
What is with the shoes?
New Adidas CEO Bjorn Gulden said on Friday that his company was "getting closer and closer to making a decision" on what do with the Yeezy sneakers, designed in collaboration with West/Ye.
However, he declined to say what would happen with them or whether they might simply be destroyed.
In the past he had noted drawbacks with other options: if they were sold, royalties would have to be paid to Ye; removing the brand identification would be dishonest; and donating them to people in need could mean they were simply resold because of their high market value.
Gulden said the collapse of the Yeezy line, which had been highly successful, accounted for lost sales in the region of €400 million.
Adidas announced in February that it could suffer an operating loss of as much as €700 million this year if decided to write off the value of its entire existing Yeezy inventory.
Gulden became CEO in January after the split with the rapper, moving from rival Puma.
Adidas calls 2023 'a transition year'
Net sales came in almost flat at €5.28 billion, defying market expectations for a fall, and Adidas's share price rose 7.5% in the afternoon on the Frankfurt Stock Exchange, with poor performance apparently already priced in on the markets prior to the announcement.
Gulden said the quarter ended a "little better than we had expected".
He pointed to positive developments in some areas, such as in the popularity of its Samba, Gazelle and Campus trainers.
Sales in Latin America were up 49%, compensating for a 9% drop in Greater China.
"2023 will be a bumpy year with disappointing numbers, where maximizing our short-term financial results is not our goal," Gulden said. "It is a transition year to build a strong base for a better 2024 and a good 2025 and beyond."