- Adidas on Monday raised its 2023 guidance after the “positive impact” of the first drop of Yeezy merchandise, according to a company press release. The retailer said future drops could further improve its results.
- Adidas is still projecting an annual loss for 2023, but the estimated operating loss has shrunk from 700 million euros ($772 million at press time) to 450 million euros. The first Yeezy sale got rid of 100 million euros worth of inventory, leaving Adidas with 400 million euros worth that will be potentially written off or sold.
- On the same day, it was announced that Michael Kadous, the senior director and general manager of North America for Adidas Outdoor, Terrex and Five Ten, was leaving the company, according to a LinkedIn post. Kadous said the “decision to leave was not an easy one” and that the executive’s next move would be announced soon.
Adidas’ decision to sell some of its Yeezy inventory seems to be paying off. Analysts watching the first drop of merchandise noted that all the styles sold out and the Financial Times recently reported the retailer received more than $500 million worth of orders, which was higher than forecast and left the retailer unable to fill all of its orders.
The end of the partnership, which came after antisemitic comments by Kanye West, also known as Ye, led the retailer to project its first annual loss in three decades. But the sale of some of that leftover inventory is lessening the expected impact.
The first drop has made a serious dent in Adidas’ projected losses for the year, cutting about 250 million euros from that number. The retailer’s revenue guidance for the year has also improved: Adidas is now expecting sales to decline at a mid-single-digit rate instead of a high-single-digit rate. In addition to the positive influence of the Yeezy sale, Adidas also said its core business “developed slightly better than expected.”
“At the same time, the company’s underlying operating profit — excluding any one-offs related to Yeezy and the ongoing strategic review — is still anticipated to be around the break-even level,” the retailer said.
The release leaves open the possibility for more Yeezy drops. An Adidas spokesperson on Friday told Retail Dive that additional releases of existing Yeezy inventory were under consideration, “but details and timing are yet to be determined.”
Clearing out the remaining Yeezy inventory would be a major help to Adidas’ financial results this year, but the retailer has more issues to solve than just the death of that partnership. Adidas has fallen steadily behind Nike over the past decade or so, and makes about $12 billion less than the athletics giant in North America.