Adidas AG lowered its earnings guidance for the third time since July after ending its partnership with rapper Ye and discontinuing the lucrative Yeezy sneaker line.
The German company now expects currency-neutral sales for the year to grow in the low-single digits, having previously targeted a mid-single digit figure. The company also lowered its guidance for this year’s operating margin to 2.5 percent from 4 percent, according to a statement.
The lower targets reflect the company’s decision last month to end its collaboration with the rapper and designer, formerly known as Kanye West, after a series of offensive and anti-Semitic comments. According to analysts, the Yeezy line accounted for about half of Adidas’ overall profits.
The sneaker maker announced on Tuesday that Björn Gulden, the former CEO of competitor Puma SE, will take over as CEO in January. The company is trying to revive its fortunes amid a series of challenges, including in China, once Adidas’ brightest spot, where sales fell by about a third through September due to the consumer boycott of Western brands.
Demand in western markets has also started to slow as consumers feel the effects of rising inflation and fears of a possible recession grow. This creates a situation where unsold goods are piling up.
Adidas is hoping for a boost from the soccer World Cup, which begins this month. Traditionally, the event has prompted a surge in sales of jerseys and football gear – although the unusual timing of this year’s event, which takes place in late autumn in the northern hemisphere, has limited excitement so far.
https://www.independent.ie/business/world/adidas-cuts-profit-forecast-after-ending-yeezy-partnership-42130297.html Adidas lowers earnings guidance after ending Yeezy partnership