Yeezy termination drags adidas 2022 outlook
The company ended the Yeezy partnership in October.
Adidas reported its currency-neutral revenues for the year will likely grow at a low-single-digit rate after the termination of its Yeezy partnership.
The company projected its gross margin to be around 47%, whilst its operating margin will likely be around 2.5%. Adidas also forecast its net income from continuing operations to reach around €250m.
This comes after the company ended its partnership with Yeezy on 25 Ocotober after recent hate speech of rapper Ye.
Despite this, the company projected the non-recurrence of the one-off costs of around €500m in 2022 to have the same impact on net income moving forward.
“adidas established a business improvement program to safeguard the company’s profitability in 2023,” the report read in part.
“As part of this program the company has launched several initiatives to mitigate the significant cost increases resulting from the inflationary pressure across the company’s value chain as well as unfavorable currency movements.”
Read more: Adidas revises 2022 outlook amidst ‘slower-than-expected’ recovery in Greater China
The program is expected to result in a one-off costs of some €50m n the fourth quarter of 2022, offsetting the cost headwinds of up to €500m in 2023.
Adidas also projected a positive profit contribution of around €200m in 2023.