© Reuters. FILE PHOTO: The Adidas logo inside a shoe before the company’s annual general meeting in Fuerth, near Nuremberg, Germany, May 11, 2017. REUTERS/Michaela Rehle
BERLIN (Reuters) – Adidas said on Thursday it expects a high-single-digit drop in sales this year after missing its own forecasts for a just 1% rise in revenue from 2022 in currency-neutral terms.
The sporting goods maker, which last October reviewed its business partnership with rapper and fashion designer Kanye West, said not selling its existing Yeezy shares could cut revenue by about 1.2 billion euros ($1.29 billion). in 2023 and operating profits at around 500 million. euros to around the break-even point.
“While the company continues to review future options for the utilization of its Yeezy inventory, this guidance already takes into account the significant adverse impact of not selling existing stock,” it said in a statement.
The full write-off of Yeezy inventory would lead to a further 500 million euros drop in operating profit, it said, along with one-time costs in 2023 of up to 200 million euros as part of a review to return to profitable growth in 2024.
That was equivalent to the worst case scenario of a loss of 700 million euros this year, the statement warned.
Adidas (OTC:) had lowered its full-year forecast in October to mid-single-digit revenue percentage growth and a 4% operating margin in light of weaker demand in China and Western markets and related one-time expenses. with the departure of Russia.
But Thursday’s results showed the company had fared worse than expected, with an operating margin of just 3%.
It will report full results for the year on March 8.
($1 = 0.9307 euros)